House Bill 665 Alabama 2026 Session

Summary

Primary Sponsor

Anthony DanielsRepresentative

Democrat

Session

2026 Regular Session

Title

Taxation; to amend 40-18-14, Code of Alabama 1975, relating to overtime compensation.

Summary

HB665 would reinstate the overtime pay exemption from Alabama income tax starting with the 2027 tax year and require a public economic impact study.

What This Bill Does

The bill rewrites the state tax code to reinstate an exemption for overtime compensation under the Fair Labor Standards Act from gross income, effective for tax year 2027 and onward (with the act becoming effective June 1, 2026). It requires the Department of Revenue and the Alabama Commission on the Evaluation of Services to conduct an economic impact study of the exemption and publicly post the results. It also adds employer data reporting requirements on overtime pay and makes nonsubstantive technical revisions to update the code language.

Who It Affects

• Full-time hourly wage-paid employees who would see overtime pay exempt from Alabama gross income, reducing taxable income starting in 2027
• Employers who must report overtime pay data to the Department of Revenue on prescribed schedules
• State agencies (Department of Revenue and the Alabama Commission on the Evaluation of Services) responsible for conducting and publishing the economic impact study

Key Provisions

• Reinstates the overtime compensation exemption from gross income for Alabama individual income tax, applicable for tax years beginning on or after January 1, 2027.
• Requires the Department of Revenue and the Alabama Commission on the Evaluation of Services to conduct an economic impact study and publicly post the results, including estimated revenue loss.
• Implements data collection and reporting requirements for employers on overtime pay for full-time hourly workers, with specific deadlines starting from 2023 data through ongoing monthly/quarterly reporting.
• Adds nonsubstantive, technical revisions to update the code language to current style.
• Effective date: June 1, 2026.

AI-generated summary using openai/gpt-5-nano-2025-08-07 on Apr 2, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue