---
title: HB 1370. Income tax; exclude a portion of overtime compensation and cash tips
collection: bills
id: 2025-2026/hb1370
cite_as: HB 1370, 2025-2026 Regular Session (Ga.)
canonical_url: https://georgiacommons.org/bills/2025-2026/hb1370
md_url: https://georgiacommons.org/bills/2025-2026/hb1370.md
text_url: https://georgiacommons.org/bills/2025-2026/hb1370/text
source_url: https://www.legis.ga.gov/legislation/73351
date: 2026-03-06
status: introduced
corpus_version: bills-2026-09-13
license: Public record of the Georgia General Assembly, via LegiScan; see about.md
publisher: Georgia Commons, an independent project of Georgia Civic Data. Not the State of Georgia. Not legal advice.
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omitted: votes and history
omitted_chars: 199
omitted_url: https://georgiacommons.org/bills/2025-2026/hb1370.md?full=1
bill_number: HB 1370
session: 2025-2026 Regular Session
session_slug: 2025-2026
chamber: House
bill_type: bill
status_date: 2026-02-18
last_action: House Committee Favorably Reported By Substitute
sponsors:
- John Carson
- Shaw Blackmon
text_version: Comm Sub
has_text: true
legiscan_url: https://legiscan.com/GA/bill/HB1370/2025
upstream_id: 2119541
summaries_model: claude-sonnet-5
topic_tags:
- income tax
- overtime pay
- tip income
- tax exemptions
- employer reporting requirements
---
# HB 1370. Income tax; exclude a portion of overtime compensation and cash tips
## Text
The House Committee on Ways & Means offers the following substitute to HB 1370:
A BILL TO BE ENTITLED
AN ACT
To amend Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated,
relating to imposition, rate, computation, exemptions, and credits for state income tax, so as
to exclude a portion of overtime compensation and cash tips from taxation; to provide for
reporting by employers; to provide for rules and regulations; to provide for definitions; to
provide for automatic repeal; to provide for related matters; to provide for an effective date
and applicability; to repeal conflicting laws; and for other purposes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to
imposition, rate, computation, exemptions, and credits for state income tax, is amended in
subsection (a) of Code Section 48-7-27, relating to computation of taxable net income, by
striking "and" at the end of paragraph (14), by replacing the period at the end of paragraph
(15) with a semicolon, and by adding new paragraphs to read as follows:
"(16)(A) For all taxable years beginning on or after January 1, 2026, and ending on
December 31, 2028, any amount up to $2,500.00 received by a full-time employee paid
by an hourly wage as compensation for work performed in excess of 40 hours a week,
and any amount paid as overtime compensation in accordance with the federal Fair
Labor Standards Act of 1938.
(B) Notwithstanding subparagraph (A) of this paragraph, for employers governed by
the federal National Railway Labor Act, the exemption provided in this paragraph shall
apply to hourly component overtime compensation as defined in applicable collective
bargaining agreements.
(C) For each tax year beginning on or after January 1, 2026, and ending on
December 31, 2028, each employer shall submit to the department, on forms prescribed
by the department, the total amount received by full-time employees paid by an hourly
wage as compensation for work performed in excess of 40 hours a week and the total
number of employees to which such compensation was paid. The data shall be
provided monthly or quarterly and shall be due no later than the due date for the
corresponding monthly or quarterly withholding tax returns, except that such data may
be provided at the end of the year for the 2026 tax year.
(D) The department may require additional information of employers and shall be
authorized to adopt rules and regulations to provide for the administration of this
paragraph.
(E) This paragraph shall stand repealed and reserved on December 31, 2028; and
(17)(A) For all taxable years beginning on or after January 1, 2026, any amount up
to $2,500.00 received in cash tips.
(B) For each tax year beginning on or after January 1, 2026, each employer shall
submit to the department, on forms prescribed by the department, the total amount
received by employees in cash tips and the total number of employees to which such
compensation was paid. The data shall be provided monthly or quarterly and shall be
due no later than the due date for the corresponding monthly or quarterly withholding
tax returns, except that such data may be provided at the end of the year for the 2026
tax year.
(C) The department may require additional information of employers and shall be
authorized to adopt rules and regulations to provide for the administration of this
paragraph.
(D) As used in this paragraph, the term:
(i) 'Cash tips' means cash received by an individual in an occupation that customarily
and regularly receives tips, including tips received from customers that are paid in
cash or charged and, in the case of an employee, tips received under any tip-sharing
arrangement, but only if such amount is paid voluntarily without any consequence in
the event of nonpayment, is not the subject of negotiation, and is determined by the
payor.
(ii) 'Occupation that customarily and regularly receives tips' means any occupation
which has been designated as such and given a Treasury Tipped Occupation Code as
set forth in the Federal Register by the secretary of the treasury of the United States.
Occupations excluded under Section 63 of the Internal Revenue Code shall also be
excluded for purposes of this paragraph.
(E) This paragraph shall stand repealed and reserved on December 31, 2028."
SECTION 2.
This Act shall become effective on July 1, 2026, and shall be applicable to all taxable years
beginning on or after January 1, 2026.
SECTION 3.
All laws and parts of laws in conflict with this Act are repealed.
## Summaries written by Georgia Commons
The following was written by claude-sonnet-5 from the text above and is not part of the bill. Quote the text, not the summary.
A Georgia House bill would let workers exclude up to $2,500 of overtime pay and up to $2,500 of cash tips from state income tax each year through 2028, while requiring employers to report that pay to the state.
### Plain-language summary
Right now, overtime pay and cash tips are treated as ordinary taxable income under Georgia's income tax law. This bill would carve out two temporary tax breaks. For tax years 2026 through 2028, full-time hourly employees could exclude up to $2,500 a year of pay earned for hours worked beyond 40 a week, including overtime paid under the federal Fair Labor Standards Act. Workers who receive cash tips could also exclude up to $2,500 a year in tips starting in 2026, also through 2028.
Employers would have to report to the Georgia Department of Revenue, on a monthly or quarterly basis, the total overtime and tip amounts paid and how many employees received them, mostly on the same schedule as their withholding tax filings. Both new tax breaks are set to automatically expire (repeal) on December 31, 2028. The changes would take effect July 1, 2026, applying to tax years starting on or after January 1, 2026.
### What it does
- Excludes up to $2,500 per year of overtime pay from Georgia taxable income for full-time hourly employees, for tax years 2026 through 2028.
- Excludes up to $2,500 per year in cash tips from Georgia taxable income, starting in 2026 and also expiring after 2028.
- Requires employers to report total overtime and tip payments and employee counts to the Department of Revenue on a monthly or quarterly basis.
- Gives the Department of Revenue authority to demand additional information from employers and to write rules for administering both exclusions.
- Sets both new tax breaks to automatically repeal on December 31, 2028 unless extended.
- Sets a special overtime rule for railway employers covered by the federal National Railway Labor Act, tying the exclusion to collective bargaining agreement definitions.
### Who it affects
Hourly full-time employees who work overtime, tipped workers such as restaurant and service industry staff, employers who must track and report overtime and tip payments, and the Georgia Department of Revenue, which must create reporting forms and enforcement rules.
### Why it matters
Eligible workers could keep more of their overtime pay and tips instead of paying state income tax on them, up to $2,500 each per year. Employers would face new monthly or quarterly reporting duties, and the tax breaks would disappear automatically after 2028 unless lawmakers act again.
### Key provisions
- Section 1 amends O.C.G.A. ยง 48-7-27(a) by adding paragraph (16), excluding up to $2,500 of overtime pay for hourly full-time employees for tax years 2026 to 2028.
- Paragraph (16)(B) applies a modified rule for railway employers under the federal National Railway Labor Act, based on collective bargaining agreement definitions of overtime.
- Paragraph (16)(C) requires employers to report total overtime pay and affected employee counts to the Department of Revenue on the withholding tax filing schedule.
- Paragraph (16)(E) repeals the overtime exclusion on December 31, 2028.
- Paragraph (17) adds a separate exclusion of up to $2,500 for cash tips received starting in tax year 2026, with similar employer reporting duties.
- Paragraph (17)(D) defines 'cash tips' and 'occupation that customarily and regularly receives tips' by reference to federal Treasury Tipped Occupation Codes and Internal Revenue Code Section 63 exclusions.
- Paragraph (17)(E) repeals the cash tips exclusion on December 31, 2028.
- Section 2 sets the effective date as July 1, 2026, applying to taxable years beginning on or after January 1, 2026.
## Status
- Status: Introduced (2026-02-18)
- Last action: House Committee Favorably Reported By Substitute (2026-03-06)
- Sponsors: John Carson, Shaw Blackmon
- Official page: https://www.legis.ga.gov/legislation/73351
> The history, votes, and amendments (199 characters) are at https://georgiacommons.org/bills/2025-2026/hb1370.md?full=1