HB826: HB826 Overtime Income Tax Exemption Act; enact

Currently, overtime pay earned by hourly workers in Georgia is taxed the same as regular wages under state income tax law. House Bill 826, called the Overtime Income Tax Exemption Act, would change that by letting full-time hourly employees exclude up to $10,000 of overtime pay (earned for hours worked beyond 40 in a week) from their Georgia taxable income, as long as that pay is part of their federal adjusted gross income. Starting with the tax year beginning January 1, 2026, employers would have to report to the Georgia Department of Revenue how much overtime pay they paid, how many employees received it, and other details the commissioner requires, on the same schedule as their withholding tax returns. By January 31, 2028, the department must report the exemption's fiscal impact to the General Assembly. The exemption itself is set to expire automatically on December 31, 2030, unless lawmakers act to extend it. The overall law would take effect July 1, 2025.

• Creates a new state income tax exclusion of up to $10,000.00 per year for overtime pay earned by full-time hourly employees for hours worked beyond 40 in a week.
• Requires employers to report the total overtime pay and number of employees receiving it to the Department of Revenue monthly or quarterly, starting with the 2026 tax year.
• Directs the Department of Revenue to submit a report to the General Assembly by January 31, 2028 on the exemption's fiscal impact.
• Automatically repeals the exemption on December 31, 2030 unless the General Assembly extends or modifies it beforehand.
• Sets the law's effective date as July 1, 2025, applying to tax years beginning on or after January 1, 2026.

Full-time hourly employees in Georgia who work overtime, and the employers who must track and report overtime pay data to the Department of Revenue. The Department of Revenue and the General Assembly are also affected through new reporting duties.

Hourly workers who regularly work overtime could see a lower state tax bill, keeping more of their overtime earnings, while employers take on new reporting duties. Because the exemption expires at the end of 2030, its long-term availability depends on future legislative action.

• Section 1 titles the bill the 'Overtime Income Tax Exemption Act.'
• Section 2 states the purpose is to reduce the tax burden on overtime earners, encourage productivity, and promote fairness for hourly employees.
• Section 3 amends Georgia's income tax code (O.C.G.A. § 48-7-27) to add a new exemption of up to $10,000.00 for overtime pay, conditioned on it being part of federal adjusted gross income.
• Section 3 also requires employers to report overtime pay totals and employee counts to the Department of Revenue on a monthly or quarterly basis starting in 2026.
• Section 3 requires a Department of Revenue report to the General Assembly by January 31, 2028 on the exemption's fiscal impact, and lets lawmakers adjust tax rates or extend the exemption.
• Section 3 sets the exemption to expire ('stand repealed and reserved') on December 31, 2030.
• Section 4 sets the effective date as July 1, 2025, applicable to tax years beginning on or after January 1, 2026.

1. 2025-03-28House Second Readers (House)
2. 2025-03-27House First Readers (House)
3. 2025-03-25House Hopper (House)

• Tanya Miller (D, HD-062)Primary sponsor
• Samuel Park (D, HD-107)
• Tyler Smith (R, HD-018)
• Spencer Frye (D, HD-122)
• William Werkheiser (R, HD-157)

• income tax
• overtime pay
• tax exemptions
• hourly workers
• state revenue