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HB 5024

AN ACT CONCERNING AN EXEMPTION FROM THE PERSONAL INCOME TAX FOR OVERTIME INCOME.

2025 Regular Session Introduced by Brian Lanoue

Connecticut bill would eliminate state income tax on overtime wages to increase take-home pay for hourly workers, though it reduces state revenue and creates administrative complexity.

REF. TO JOINT COMM. ON Finance, Revenue and Bonding
#employees #incometaxpersonalexemptions(state) #overtime
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WeVote Research Nonpartisan
Bill Summary · HB 5024

Legislative bill overview

HB 5024 proposes to exempt overtime income from Connecticut's personal income tax, allowing workers who earn wages beyond standard working hours to keep that additional income tax-free. The bill would create a carve-out in the state's income tax code specifically for compensation earned at overtime rates.

Why is this important

Overtime income provides crucial additional earnings for millions of working families, and exempting it from state taxation would increase take-home pay for these workers. This directly affects affordability for middle and working-class households while also influencing state revenue and labor market dynamics.

Potential points of contention

  • Revenue impact: Exempting overtime income would reduce state tax revenue, potentially requiring offsetting cuts elsewhere or tax increases on other income sources to maintain budget balance
  • Fairness and complexity: Questions arise about why overtime is privileged over regular wages, and implementation challenges around how to distinguish and track overtime versus regular income for tax purposes
  • Labor market effects: Unclear whether the incentive would genuinely increase overtime work or simply reduce taxes on hours already being worked, raising questions about the policy's actual effectiveness versus its cost

Compiled from official sources — confirm details with the bill’s official record.

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