MONTGOMERY, Ala. – A bill that would exempt overtime pay from state income tax saw unanimous approval in the House Ways and Means Education Committee Wednesday morning, receiving praise from a number of committee members.
Sponsored by Rep. Anthony Daniels, D-Huntsville, House Bill 217 would exclude pay from any hours worked in excess of 40 from the state’s 5% income tax, and would go into effect Jan. 1, 2024, were it to become law.
“This is an opportunity to provide a tax incentive for work,” Daniels said during the committee meeting.
“What this bill does is (make) hourly workers that work in excess of 40 hours exempt from the income tax rate. So this increases the workforce participation rate, but also provides an incentive for experienced workforce to work additional hours and take home more.”
Rep. Danny Garrett, R-Trussville, the chair of the committee, called the bill “one of the most intriguing bills that has come before our body in a while,” and asked Daniels what other states had implemented similar laws.
“No one,” Daniels said.
It was because of the unprecedented bill, Garrett said, that he introduced an amendment that would sunset the bill after three years were it to become law, an amendment that saw unanimous approval. Lawmakers could later extend the law.
The bill itself also received unanimous approval, but not before Rep. Barbara Drummond, D-Mobile, called it “innovative,” Rep. Troy Stubbs, R-Wetumpka, called it “compelling,” and Rep. Prince Chestnut, D-Valley Grande, called it “pro-innovation and pro-Alabama.”