SB137 Alabama 2023 Session

Summary

Primary Sponsor

Sam GivhanSenator

Republican

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

SB137 would exclude overtime pay (hours over 40 in a week) from Alabama gross income for state income tax, starting in 2024.

What This Bill Does

It amends Section 40-18-14 to explicitly exclude overtime hours from gross income. As a result, pay for work over 40 hours in a week would not be counted when calculating Alabama state income tax. The change applies to tax years beginning after December 31, 2023, with an effective date of January 1, 2024. The Department of Revenue may adopt rules to administer these provisions.

Who It Affects

• Full-time hourly wage employees who work more than 40 hours in a week—overtime pay would be excluded from gross income for Alabama state income tax.
• Alabama residents and nonresidents with overtime income sourced in Alabama, since it affects the amount of gross income used to compute state tax.

Key Provisions

• Excludes hours worked in excess of 40 per week from gross income for state income tax purposes (specifically for full-time hourly wage employees).
• Amends Section 40-18-14 to add this overtime exclusion to the list of items exempt from gross income.
• Effective for tax years beginning after December 31, 2023; actual effective date January 1, 2024.
• Department of Revenue may adopt rules to administer the new overtime exclusion.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Overtime wages, excluded from gross income