Bill
HD 426
Overview: HD 426, An Act relative to taxes on overtime wages, proposed bill, introduced November 29, 2025.Purpose and Intent: The primary goal of this legislation is to modify the
Overview: HD 426, An Act relative to taxes on overtime wages, proposed bill, introduced November 29, 2025.
Purpose and Intent: The primary goal of this legislation is to modify the state's tax code to provide relief for workers who earn overtime pay. The bill aims to incentivize employers to offer overtime hours and reduce the tax burden on employees who rely on overtime income.
Key Provisions:
- Reduces the state income tax rate by 2 percentage points on all overtime wages earned
- Requires employers to clearly identify overtime pay on employee paystubs and W-2 forms
- Directs the state Department of Revenue to develop guidance and educational materials for employers and workers
- Includes a sunset provision to automatically repeal the tax reduction after 5 years unless extended by the legislature
Affected Parties and Impacts:
- Hourly and salaried workers who earn overtime pay, who will see an increase in their take-home income
- Employers who offer overtime hours, who may see increased worker productivity and retention
- State government, which will experience a moderate reduction in tax revenue during the 5-year period
Procedural and Timeline Considerations:
The bill has been introduced in the state House of Representatives and has been referred to the Committee on Ways and Means. If passed, the tax changes would take effect at the start of the next tax year.
Compiled from official sources — confirm details with the bill’s official record.
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