WeVote
Log In

Bill

WeVote Research Nonpartisan
Bill Summary · HB 467

Summary of HB 467: Taxation - Overtime Compensation Exemption

Bill Number: HB 467
Introduced On: March 20, 2025
Status: Read for the first time and referred to the House Committee on Ways and Means Education
Classification: Bill
Subject: Taxation & Revenue

Purpose and Intent

The primary purpose of HB 467 is to amend Section 40-18-14 of the Code of Alabama 1975 to remove the sunset provision that currently limits the exemption of overtime compensation from state income tax. This bill aims to provide ongoing tax relief for employees receiving overtime pay, thereby supporting workers and potentially stimulating economic activity.

Key Provisions

  • Removal of Sunset Provision:
    The bill eliminates the expiration date for the exemption of overtime compensation from gross income calculations, which is currently set to end on June 30, 2025. This change will allow the exemption to remain in effect indefinitely.

  • Economic Impact Study:
    The bill mandates that the Alabama Department of Revenue and the Alabama Commission on the Evaluation of Services conduct an economic impact study to assess the effects of the overtime compensation exemption. The findings of this study must be publicly posted.

  • Technical Revisions:
    HB 467 includes nonsubstantive, technical revisions to update the existing code language to current style, ensuring clarity and consistency in the legal text.

Affected Parties

  • Employees:
    Full-time hourly wage-paid employees who receive overtime compensation will benefit from the continued exemption, allowing them to retain more of their earnings.

  • Employers:
    Employers will need to comply with reporting requirements regarding overtime compensation paid to employees. They will be required to submit data to the Department of Revenue regarding the total amount of overtime paid and the number of employees affected.

Procedural Aspects

  • Committee Review:
    The bill is currently pending committee action in the House of Origin (Ways and Means Education) as of March 20, 2025. Further discussions and potential amendments will occur during this review process.

  • Timeline for Implementation:
    The exemption for overtime compensation was initially set to apply through June 30, 2025. If passed, HB 467 would extend this exemption indefinitely, impacting future tax calculations for employees receiving overtime pay.

Conclusion

HB 467 seeks to provide long-term tax relief for employees by removing the sunset provision on the exemption of overtime compensation from state income tax. By requiring an economic impact study, the bill also aims to ensure that the effects of this exemption are understood and publicly available, promoting transparency in the legislative process.

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

Sign in to ask a question.