Some Alabama employees will be able to receive better pay starting in 2024. This is a bill signed by Governor Kay Ivey that will benefit hourly workers in the state. We're talking about new legislation that aims to exempt overtime pay from state income tax to some employees in Alabama.
The idea is that these employees have the opportunity to receive some tax relief. In the meantime, this new policy will come into effect from January 1, 2024.
Likewise, the governor of Alabama said at the legislative signing that the state's residents have never been afraid of hard work. “When opportunities and sometimes challenges present themselves, the citizens of our state get the job done,” said Kay Ivey.
What impact would this law have?
This would eliminate the state income tax on overtime pay for full-time workers in Alabama. On the other hand, this change would create the conditions to achieve a 5% salary increase for a position. More than 40 hours a week would be worked here.
In this sense, Anthony Daniels, the sponsor of the bill, made some key points.
For example, from a productivity perspective, it gives employees the opportunity to earn more money without the employer having to give a raise.
As Daniels expressed, the law will be in effect until June 2025. Additionally, tax breaks for hourly workers in Alabama would at least partially offset the loss of income.
This way, people are likely to spend the extra money they save thanks to the exemption. Additionally, such spending would increase tax revenues at the local and state levels.