The bill amends Section 40-18-14 of the Code of Alabama 1975, concerning the definition of gross income for state income tax purposes. It introduces an exemption from state income tax for amounts paid as overtime compensation in accordance with the U.S. Fair Labor Standards Act. This exemption is applicable for tax years beginning after December 31, 2023, and ending on June 30, 2025. The bill also specifies that for employers governed by the National Railway Labor Act, the exemption applies to hourly component overtime compensation as defined in applicable collective bargaining agreements.

The bill requires employers to submit data to the Department of Revenue, including the total amount received by full-time hourly wage-paid employees as overtime compensation and the total number of employees for which it was paid. This data is due annually, with the first submission by January 31, 2024, for the tax year beginning January 1, 2023. Subsequent data is to be provided monthly or quarterly, coinciding with the due dates for corresponding withholding tax returns. The Department of Revenue is also tasked with reporting the collected data to the Legislative Services Agency - Fiscal Division and the Department of Finance within 30 days after the data's due date. The bill 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