The proposed bill amends the Tax Reform Code of 1971 by introducing a new section, Section 314.1, which establishes a tax credit for taxpayers on overtime wages. Under this provision, taxpayers will be entitled to a tax credit equal to the amount of income derived from overtime wages, calculated using the tax rate specified in section 302. The credit will cover 100% of the taxes paid on overtime wages, with adjustments made for any tax forgiveness received under section 304. Additionally, the tax credit is fully refundable and cannot exceed the proportion of the tax otherwise due. Taxpayers must provide documentation from their employers to substantiate their claims for the credit.

The bill also defines "overtime wages" as those paid at least one and one-half times the employee's regular wage, in accordance with the Minimum Wage Act of 1968. The Department of Revenue is tasked with incorporating the tax credit into the standard PA 40 form, ensuring that taxpayers can easily apply for the credit. This act will apply to taxable years beginning after December 31, 2025, and will take effect immediately upon passage.

Statutes/Laws affected:
Printer's No. 1887 (Jun 10, 2025): P.L.6, No.2