Alabama lawmakers are considering making permanent the state income tax exemption for overtime pay, which was originally set to expire in 2025. The exemption, introduced in 2023 to provide relief to hourly workers, has bipartisan support and has been praised for increasing take-home pay. House Minority Leader Anthony Daniels sponsors the bill to remove the sunset clause and argues that the policy benefits workers in various sectors. Supporters believe the exemption encourages workforce participation and boosts economic activity in the state. The proposal aligns with the Alabama Policy Institute’s focus on economic freedom. While multiple tax relief measures are being considered, lawmakers are cautious about committing to permanent income tax cuts due to economic uncertainty. Supporters of the bill emphasize its potential to incentivize work and ease cost-of-living pressures, while opponents raise concerns about long-term education funding. Despite fiscal caution, Daniels remains hopeful that the bill will pass this session. With ongoing discussions with House and Senate leadership, the fate of HB467 and the push to make overtime pay permanently tax-free remain closely watched as the legislative session progresses. As lawmakers balance immediate relief with long-term planning, the impact of the exemption will continue to be a key point of debate.
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