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HB 504

Income tax; exclude overtime compensation from gross income.

2025 Regular Session Introduced by Bryant Clark

Mississippi bill would exempt overtime wages from state income tax to increase take-home pay for overtime workers, but died in committee.

Died In Committee
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Bill Summary · HB 504

Legislative bill overview

HB 504 proposes to exclude overtime compensation from gross income for state income tax purposes in Mississippi. This would effectively create a tax exemption specifically for wages earned through overtime work, reducing the taxable income of employees who work overtime hours.

Why is this important

Overtime compensation often represents significant additional income for workers in manufacturing, healthcare, retail, and other sectors. This tax exclusion would directly increase take-home pay for overtime workers, potentially affecting state revenue and creating questions about horizontal equity among taxpayers with similar total incomes.

Potential points of contention

  • Revenue impact: Excluding overtime from taxation reduces state income tax revenue; the fiscal impact depends on how many workers qualify and their overtime amounts
  • Fairness questions: Workers with the same total income would pay different tax rates depending on whether income comes from regular hours or overtime, raising horizontal equity concerns
  • Economic efficiency: It's unclear whether a tax incentive for overtime is the most effective policy tool compared to direct wage support or other workforce development approaches
  • Implementation complexity: Determining what qualifies as "overtime compensation" and compliance verification could create administrative challenges

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

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