The "Overtime but not Overtaxed Act" aims to exempt compensation for overtime work from the state income tax in Arkansas. The bill defines "overtime" as any hours worked beyond forty in a workweek that are required to be compensated under the Fair Labor Standards Act of 1938. This exemption is intended to provide financial relief to workers who earn additional income through overtime hours.

The bill includes a new section in the Arkansas Code, specifically 26-51-317, which outlines the definition of overtime and establishes the income tax exemption for such compensation. Additionally, it specifies that the provisions of this act will take effect for tax years beginning on or after January 1, 2026.