The bill amends Section 40-18-14 of the Code of Alabama 1975 to redefine "gross income" for state income tax purposes. A significant change is the exemption of amounts paid as overtime compensation in accordance with the U.S. Fair Labor Standards Act from state income tax. This exemption applies to full-time hourly wage-paid employees for tax years beginning after December 31, 2023, and will remain in effect until June 30, 2025. Additionally, the bill requires employers to report the total amount of overtime compensation paid and the number of employees receiving it to the Department of Revenue, with specific reporting deadlines.

The bill also includes provisions for employers governed by the National Railway Labor Act, allowing them to apply the exemption to hourly component overtime compensation as defined in their collective bargaining agreements. The Department of Revenue is tasked with compiling and reporting the data collected from employers to the Legislative Services Agency and the Department of Finance. The act is set to become effective on October 1, 2024.

Statutes affected:
Introduced: 40-18-14, 40-18-14
Engrossed: 40-18-14, 40-18-14
Enrolled: 40-18-14, 40-18-14