Alabama House passes overtime tax deduction bill

Legislation aims to provide tax relief for workers earning overtime pay.

Apr. 2, 2026 at 5:34am

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The Alabama House of Representatives has passed a bill that would allow residents to deduct a portion of their overtime wages from their state income taxes. The legislation is intended to provide tax relief for workers who earn extra pay by working overtime hours.

Why it matters

This bill is seen as a pro-worker measure that could help offset the higher tax burden faced by Alabamians who earn overtime pay. Supporters argue it will incentivize employers to offer more overtime opportunities and put more money back in the pockets of working families.

The details

The bill would allow Alabama taxpayers to deduct up to $5,000 in overtime wages from their state income taxes each year. The deduction would apply to any overtime pay earned above an employee's regular 40-hour work week. Proponents say the legislation will help workers keep more of what they earn and provide a boost to the state's economy.

  • The Alabama House of Representatives passed the bill on April 2, 2026.

The players

Alabama House of Representatives

The lower chamber of the Alabama state legislature, which voted to pass the overtime tax deduction bill.

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What’s next

The bill will now move to the Alabama Senate for consideration. If passed by the Senate and signed into law by the governor, the overtime tax deduction would take effect starting in the 2027 tax year.

The takeaway

This legislation demonstrates Alabama's efforts to support working families by providing tax relief for overtime earnings. The bill reflects a growing national trend of states exploring ways to ease the tax burden on middle-class workers.