House Bill No. by Representative Bayham proposes to enact a new income tax deduction for resident individual taxpayers who receive overtime compensation. The bill introduces new legal language to define "overtime compensation" as that required under Section 7 of the Fair Labor Standards Act of 1938. The deduction will allow taxpayers to deduct the amount of overtime compensation received, provided it does not exceed 20% of their other wages from the same employer during the taxable year.

Eligibility for this deduction is limited to taxpayers whose adjusted gross incomes fall below specified thresholds based on their filing status: $200,000 for married filing jointly or surviving spouse, $150,000 for head of household, and $100,000 for single or married filing separately. The provisions of this bill will apply to taxable periods beginning on or after January 1, 2026, and the bill will become effective on that same date.