---
title: HB 375. Income tax; exclude overtime compensation
collection: bills
id: 2025-2026/hb375
cite_as: HB 375, 2025-2026 Regular Session (Ga.)
canonical_url: https://georgiacommons.org/bills/2025-2026/hb375
md_url: https://georgiacommons.org/bills/2025-2026/hb375.md
text_url: https://georgiacommons.org/bills/2025-2026/hb375/text
source_url: https://www.legis.ga.gov/legislation/70137
date: 2025-02-12
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: 129
omitted_url: https://georgiacommons.org/bills/2025-2026/hb375.md?full=1
bill_number: HB 375
session: 2025-2026 Regular Session
session_slug: 2025-2026
chamber: House
bill_type: bill
status_date: 2025-02-10
last_action: House Second Readers
sponsors:
- Tyler Smith
- Steve Tarvin
- Alan Powell
- Martin Momtahan
- Stan Gunter
- Rob Leverett
text_version: Introduced
has_text: true
legiscan_url: https://legiscan.com/GA/bill/HB375/2025
upstream_id: 1964580
summaries_model: claude-sonnet-5
topic_tags:
- income tax
- overtime pay
- tax exemption
- hourly workers
- employer reporting
---
# HB 375. Income tax; exclude overtime compensation
## Text
House Bill 375
By: Representatives Smith of the 18th, Tarvin of the 2nd, Powell of the 33rd, Momtahan of the
17th, Gunter of the 8th, and others
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 the imposition, rate, computation, exemptions, and credits for state income tax,
so as to exclude overtime compensation from taxation; to provide for reporting by
employers; to provide for rules and regulations; to provide for a definition; 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 the
imposition, rate, computation, exemptions, and credits for state income tax, is amended in
subsection (a) of Code Section 48-7-27, relating to the computation of taxable net income,
by deleting "and" at the end of paragraph (14), by replacing the period at the end of
paragraph (15) with "; and", and by adding a new paragraph to read as follows:
"(16)(A) For all taxable years beginning on or after January 1, 2026, any amount
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, 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.
(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."
SECTION 2.
This Act shall become effective on July 1, 2025, 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.
House Bill 375 would exempt overtime pay for hourly, full-time workers in Georgia from state income tax starting with the 2026 tax year, while requiring employers to report overtime data to the state.
### Plain-language summary
Currently, overtime pay earned by hourly employees in Georgia is taxed as ordinary income under state law. This bill would change that by adding a new exemption to Georgia's income tax code (O.C.G.A. § 48-7-27). Starting with tax years beginning on or after January 1, 2026, overtime compensation paid to full-time, hourly employees for work beyond 40 hours a week, including overtime required under the federal Fair Labor Standards Act, would no longer count as taxable income.
The bill also covers railway workers under a separate federal law, applying the exemption based on overtime terms in their union contracts. To track how much overtime pay is being exempted, employers would have to report the total overtime amounts and number of employees receiving it to the Georgia Department of Revenue on a monthly or quarterly basis. The department would be allowed to write rules to administer the new exemption. The law would take effect July 1, 2025, but the tax exemption itself applies to income earned in 2026 and later.
### What it does
- Exempts overtime pay earned by hourly, full-time employees for work beyond 40 hours a week from Georgia state income tax, starting in tax year 2026.
- Extends the same tax exemption to railway workers' overtime pay as defined in their collective bargaining agreements under the federal National Railway Labor Act.
- Requires every employer to report to the Georgia Department of Revenue the total overtime pay and number of employees who received it, on a monthly or quarterly basis.
- Gives the Department of Revenue authority to demand additional information from employers and to write rules for administering the new tax exemption.
- Sets the law's effective date as July 1, 2025, while making the actual tax exemption apply only to income earned in tax years starting on or after January 1, 2026.
### Who it affects
Hourly, full-time workers in Georgia who earn overtime pay, railway employees covered by union collective bargaining agreements, employers who must track and report overtime data, and the Georgia Department of Revenue, which must collect that data and write new rules.
### Why it matters
Hourly workers who regularly work more than 40 hours a week would keep more of their overtime earnings because that pay would no longer be taxed by the state. Employers would face new monthly or quarterly reporting duties, and the state would collect less income tax revenue from overtime wages.
### Key provisions
- Section 1 adds a new paragraph (16) to O.C.G.A. § 48-7-27 excluding overtime pay for hourly full-time employees, including overtime under the federal Fair Labor Standards Act, from Georgia taxable income.
- Subparagraph (B) extends the exemption to railway workers governed by the federal National Railway Labor Act, based on overtime terms in applicable collective bargaining agreements.
- Subparagraph (C) requires employers to report total overtime pay and the number of employees receiving it to the Department of Revenue monthly or quarterly, on the same schedule as withholding tax returns.
- Subparagraph (D) allows the Department of Revenue to request additional information and adopt rules to administer the exemption.
- Section 2 sets the effective date as July 1, 2025, with the exemption applying to tax years beginning on or after January 1, 2026.
- Section 3 repeals any conflicting laws.
## Status
- Status: Introduced (2025-02-10)
- Last action: House Second Readers (2025-02-12)
- Sponsors: Tyler Smith, Steve Tarvin, Alan Powell, Martin Momtahan, Stan Gunter, Rob Leverett
- Official page: https://www.legis.ga.gov/legislation/70137
> The history, votes, and amendments (129 characters) are at https://georgiacommons.org/bills/2025-2026/hb375.md?full=1