HB217 Alabama 2023 Session

Updated Feb 26, 2026

Notable

Summary

Primary Sponsor: Anthony DanielsRepresentative
Democrat
Session: Regular Session 2023
Title: Relating to gross income; to amend Section 40-18-14, Code of Alabama 1975; to exclude hours worked above 40 in any given week from gross income.
Summary: HB217 would exclude overtime pay for hours worked over 40 in a week from Alabama gross income for state income tax for a limited period, with a cap and new reporting requirements.
What This Bill Does
It adds an exemption so that overtime compensation paid to full-time hourly employees (for work over 40 hours in a week) is not counted in gross income for Alabama state income tax. The exemption is temporary, applying to tax years starting after December 31, 2023 and ending by June 30, 2025. A cap limits the exemption to $25 million in aggregate income taxes exempted each year. Employers must report overtime pay totals and the number of affected employees to the Department of Revenue, with specific filing timelines, and the Department must report the collected data to the Legislative Services Agency and the Department of Finance within 30 days of the data due dates.

Who It Affects
Full-time hourly wage-paid employees: their overtime pay above 40 hours per week would be excluded from the state gross income calculation, potentially lowering their Alabama income tax during the exemption period.
Employers and the Alabama Department of Revenue: employers face new reporting requirements (total overtime pay and number of employees affected) and the Department administers the exemption, including enforcing the annual cap and providing collected data to state fiscal offices.

Key Provisions
Overtime pay for work beyond 40 hours in a week earned by full-time hourly employees is exempt from gross income for Alabama state income tax.
The exemption applies to tax years beginning after December 31, 2023 and ending by June 30, 2025.
An annual cap of $25 million is placed on the total amount of income tax exempted under this provision.
Employers must report to the Department of Revenue the total overtime pay and the total number of employees paid overtime, with initial data due by January 31, 2024 and subsequent reports on a monthly or quarterly basis.
The Department of Revenue must report the collected data to the Legislative Services Agency - Fiscal Division and the Department of Finance within 30 days after each data due date.
The Department of Revenue may adopt rules to administer these provisions.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Regarding income tax; Adjusted Gross Income, exemption for hours worked over 40