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SB 651

AN ACT EXEMPTING OVERTIME INCOME FROM THE PERSONAL INCOME TAX.

2025 Regular Session Introduced by M.D. Rahman

Connecticut bill would eliminate state income tax on overtime wages, reducing state revenue while increasing take-home pay for overtime workers but potentially creating inequities across employment types.

REF. TO JOINT COMM. ON Finance, Revenue and Bonding
#incometaxexemptions(state) #overtime
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WeVote Research Nonpartisan
Bill Summary · SB 651

Legislative bill overview

SB 651 would exempt overtime income from Connecticut's personal income tax, allowing workers who earn overtime pay to exclude those earnings from state tax calculations. The bill specifically targets compensation earned beyond standard 40-hour workweeks, potentially reducing state tax liability for affected workers.

Why is this important

Overtime workers—particularly in manufacturing, healthcare, emergency services, and construction—could see immediate take-home pay increases without changing their hourly rates. This directly addresses cost-of-living pressures for working-class Connecticutians, though it also represents a significant reduction in state tax revenue that would need to be addressed through spending cuts or other revenue sources.

Potential points of contention

  • Revenue impact: Connecticut would lose substantial tax revenue from overtime earners, requiring either spending reductions elsewhere or compensatory tax increases on other income sources
  • Fairness questions: Salaried employees and commission-based workers wouldn't benefit equally, potentially creating inequities between compensation structures
  • Definition complexity: The bill must clearly define "overtime income" (does it include shift differentials, hazard pay, or only hours beyond 40/week?), and enforcement mechanisms would need development
  • Economic effects: Uncertain whether this meaningfully incentivizes work or primarily benefits those already working overtime, versus stimulating job creation or wage growth

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

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