House Minority Leader Anthony Daniels (D-Huntsville) dropped a surprise bill on Thursday, slashing all taxes on overtime pay days after years of feuding with Republican lawmakers over passing legislation that House Democrats believe don’t go far enough.
Daniels has taken on the tax on overtime wages for years, without gaining much ground amid pushback from lawmakers who bemoan the perceived hit to state coffers.
Daniels led an effort in the 2025 legislative session to permanently eliminate the state’s tax on overtime wages, after the legislature allowed a temporary cut from 2023 lapse in June 2025.
Daniels argued with Republican lawmakers, who claimed the economic impact would negatively affect state income, stressing that workforce participation was significantly higher when the temporary cut was in place, a fact he believes would increase production.
This year, Republican leadership backed a tax deduction for overtime pay that included a two-month grocery tax holiday. However, House Democrats railed against the majority party for recapitulating a long-time Democratic cause after years of opposition.
The House passed HB 527, by State Rep. James Lomax (R-Huntsville), on Tuesday, which the lawmaker touted as “sustainable” and as providing “relief for the employees that need it.”
The bill allows a maximum tax deduction of $1,000 for any overtime income earned by an individual. The deduction would apply to tax years beginning in 2026 and would expire after 2028. State Rep. Mike Shaw (R-Hoover) also added an amendment to the bill, adding a two-month grocery tax holiday. Democrats have similarly been advocating a total cut to the grocery tax.
Daniels 2025 bill had multiple Republican lawmakers as cosponsors. This year’s version has none.
House Bill 665 (HB665) by Daniels has scant chance of reaching the finish line with only three legislative days remaining in the session, and no apparent appetite from leadership in the Republican supermajority. The legislation would make the now-lapsed law exempting gross wages earned via overtime exempt from state taxes.
State Rep. Phillip Ensler (D-Montgomery) noted during debate on Lomax’s bill that he wished the body was taking up Daniels’ tax cut, but noted it was “better than nothing.”
“All of this was started by Democrats,” State Rep. Barbara Drummond (D-Mobile) announced from the House floor, speaking on Shaw’s amendment.
Daniels, who eventually voted in favor of Lomax’s bill, stressed what he believes is the necessity for the state to make substantive efforts to aid struggling Alabamians, pointing to current increases in the cost of fuel combined with the state’s ongoing gas tax.
“I just want us to think through the decisions that we’re making to ensure that they’re yielding the outcomes that we need, not a headline," Daniels said.
He continued, “I think that this will help some people, but I also think that we’ve got to think about the long-term impact and the goal.”
State Rep. Patrice McClammy (D-Montgomery) noted that she was a part of a grocery tax task force, which she claimed was never consulted on the grocery tax amendment. She also joined Drummond in claiming that Republicans were trying to steal Democrats’ thunder by absorbing a Democratic cause.
“This is not your bill,” McClammy said. “This is not your cause. It was ours.”
HB527 eventually passed 100-0 with five abstentions. It later passed its Senate committee on Wednesday.
HB665 was assigned to the House Ways and Means Education Committee and awaits action there.
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