Act No. 2024-437
By Rep. Phillip Pettus, R-Killen
As of Oct. 1, Alabama’s state income tax overtime exemption applies to overtime compensation as paid in accordance with the U.S. Fair Labor Standards Act and as defined in collective bargaining agreements with employers governed by the National Labor Railway Act.
Under the new law, the exemption adopted in 2023 for full-time hourly wage employees who work more than 40 hours a week ends Oct. 1. From Oct. 1 through June 30, 2025, the exemption instead would be applied based on the U.S. Fair Labor Standards Act. June 30, 2025. is the ending date for the 2023 exemption.
Thursday, May 2, the Alabama Senate rewrote and the House concurred with legislation by Rep. Phillip Pettus, R-Killen. Gov. Kay Ivey signed Act No. 2024-437 on May 17.
The current state exemption based on full-time hourly wages excluded public safety employees, rail workers and others who work non-traditional schedules. Federal law contains specific overtime provisions for those types of occupations.
Act No. 2024-437 also changes reporting provisions of the 2023 law. For the 2024 tax year, all employers are to report to the Alabama Department of Revenue the amount of overtime paid to full-time hourly employees through Sept. 30. From Oct. 1 forward, employers are to report overtime paid according to the Fair Labor Standards Act/National Labor Railway Act and the number of employees who received that pay.
RELATED MEDIA REPORT: Overtime tax exemption law will have much larger fiscal impact than expected (aldailynews.com)
This article is part of the Alabama Retail Report, a communication for Alabama Retail Association members. Not a member? Join us!
Reprints or republishing are welcomed but require permission. Contact us for permission.