House Bill 527 Alabama 2026 Session

Summary

Primary Sponsor

James LomaxRepresentative

Republican

Session

2026 Regular Session

Title

Individual income taxes; deduction for qualified overtime income established.

Summary

HB527 would create a new Alabama income tax deduction for qualified overtime income up to $1,000 per taxpayer for 2025–2027.

What This Bill Does

It adds a deduction from Alabama adjusted gross income equal to the amount of qualified overtime compensation received during the tax year, up to a $1,000 cap per taxpayer. This deduction can be claimed regardless of whether the taxpayer itemizes deductions. Qualified overtime is defined and calculated under federal rules (26 U.S.C. § 225). The bill also includes nonsubstantive technical revisions to update the state tax code language.

Who It Affects

• Taxpayers who earned qualified overtime compensation, who can reduce their Alabama taxable income by up to $1,000 per year.
• All Alabama individual income taxpayers, including those who take the standard deduction, since the overtime deduction is available regardless of itemizing.

Key Provisions

• Adds a deduction for qualified overtime compensation equal to the amount received in the tax year, up to $1,000 per taxpayer, for tax years 2025 through 2027.
• Qualified overtime compensation is defined and calculated under 26 U.S.C. § 225.
• The overtime deduction is allowed regardless of whether the taxpayer itemizes deductions.
• The bill includes nonsubstantive, technical revisions to update the Alabama code language to current style.
• Timing note: the synopsis states the overtime deduction applies to 2025–2027, while the bill’s Section 2 sets the act to become effective October 1, 2026.

AI-generated summary using openai/gpt-5-nano on Feb 26, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue