The bill amends the Tax Reform Code of 1971 to introduce 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 be fully refundable and will not exceed the proportion of the tax otherwise due. Taxpayers must provide documentation from their employers to substantiate their claims for the credit, and the Department of Revenue is tasked with incorporating this credit into the standard PA 40 tax form.

The bill defines "overtime wages" as wages that are required to be paid at least one and one-half times the employee's regular wage, in accordance with the Minimum Wage Act of 1968. The tax credit is designed to support workers who earn overtime by alleviating their tax burden on those earnings. 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