HB1822
The Overtime But Not Overtaxed Act.
Last Action (May 5, 2025): Died in House Committee at Sine Die adjournment.
Sponsors
AI-Generated Summary
House Bill 1822, titled the 'Overtime but not Overtaxed Act,' proposes an amendment to the Arkansas Code to exempt income earned from overtime work from state income tax. The bill defines overtime as hours worked exceeding forty hours in a workweek that are eligible for compensation under the federal Fair Labor Standards Act of 1938. The tax exemption would apply to tax years beginning on or after January 1, 2026. The primary purpose of the legislation is to provide a tax incentive for employees who work more than standard full-time hours by excluding such earnings from the state's income tax levy.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries are hourly wage earners and employees who regularly work more than 40 hours per week and are eligible for overtime pay under the Fair Labor Standards Act. These individuals would see an increase in their take-home pay because the overtime portion of their compensation would be exempt from state income taxes.
Who Might Suffer?
The primary entity negatively impacted would be the State of Arkansas, specifically the state government's general revenue fund. By exempting overtime pay from income taxation, the state would experience a reduction in annual tax collections, potentially limiting funds available for public services, infrastructure, or other state-funded programs.
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