According to State Sen. Arthur Orr (R-Decatur), legislation modeled after President Donald Trump's One Big Beautiful Bill, which would eliminate up to $1,000 in state income tax on qualified overtime pay, will likely pass both the Alabama House and Senate.
During a recent interview with Mobile radio's FM Talk 106.5's "The Jeff Poor Show," Orr discussed the positive impact House Bill 527 could have on hourly employees who work more than 40 hours a week.
"That should give those employees relief and encourage them for working hard," Orr told host Jeff Poor. "Basically, reward them for the overtime that they have, and not be the tax man standing there wanting a piece of the action. Following the Trump model, as I understand it, we would have a cap on the actual amount of taxes that would be exempt. But if you want to game the system and do a whole lot of overtime, we can't afford to just have no cap on there."
The lawmaker cautioned that the state cannot afford legislation that would create a major deduction in tax revenue due to an exemption.
"The original bill, as you recall, cost the state over a period of 18 months or so, well over $400 million, and the original revenue estimate had been around $40 or $50 million. They were way off as far as the reduction in revenue and the cost of that," explained Orr. "This having a dollar cap on it will give something back, or let those employees keep in their pockets part of their overtime pay that ordinarily would be coming to the state in taxes. "
"But if it becomes a lot, then we can't endure a $400 million fiscal hit," Orr added.
To connect with the author of this story or to comment, email [email protected].
Don't miss out! Subscribe to our newsletter and get our top stories every day.
