HB1370: HB1370 Income tax; exclude a portion of overtime compensation and cash tips

26 LC 44 3495S 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 Cod e of Georgia Annotated,1 relating to imposition, rate, computation, exemptions, and credits for state income tax, so as2 to exclude a portion of overtime compensation and cash tips fro m taxation; to provide for3 reporting by employers; to provide for rules and regulations; t o provide for definitions; to4 provide for automatic repeal; to provide for related matters; to provide for an effective date5 and applicability; to repeal conflicting laws; and for other purposes.6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:7 SECTION 1.8 Article 2 of Chapter 7 of Title 48 of the Official Code of Geor gia Annotated, relating to9 imposition, rate, computation, exemptions, and credits for state income tax, is amended in10 subsection (a) of Code Section 48-7-27, relating to computation of taxable net income, by11 striking "and" at the end of paragraph (14), by replacing the period at the end of paragraph12 (15) with a semicolon, and by adding new paragraphs to read as follows:13 "(16)(A) For all taxable years beginning on or after January 1, 2026, and ending on14 December 31, 2028, any amount up to $2,500.00 received by a full-time employee paid15 by an hourly wage as compensation for work performed in excess of 40 hours a week,16 H. B. 1370 (SUB) - 1 - 26 LC 44 3495S and any amount paid as overtime compensation in accordance with the federal Fair17 Labor Standards Act of 1938.18 (B) Notwithstanding subparagraph (A) of this paragraph, for employers governed by19 the federal National Railway Labor Act, the exemption provided in this paragraph shall20 apply to hourly component overtime compensation as defined in applicable collective21 bargaining agreements.22 (C) For each tax year beginning on or after January 1, 2026, a nd ending on23 December 31, 2028, each employer shall submit to the department, on forms prescribed24 by the department, the total amount received by full-time employees paid by an hourly25 wage as compensation for work performed in excess of 40 hours a week and the total26 number of employees to which such compensation was paid. The d ata shall be27 provided monthly or quarterly and shall be due no later than th e due date for the28 corresponding monthly or quarterly withholding tax returns, except that such data may29 be provided at the end of the year for the 2026 tax year.30 (D) The department may require additional information of emplo yers and shall be31 authorized to adopt rules and regulations to provide for the ad ministration of this32 paragraph.33 (E) This paragraph shall stand repealed and reserved on December 31, 2028; and34 (17)(A) For all taxable years beginning on or after January 1, 2026, any amount up35 to $2,500.00 received in cash tips.36 (B) For each tax year beginning on or after January 1, 2026, e ach employer shall37 submit to the department, on forms prescribed by the department , the total amount38 received by employees in cash tips and the total number of empl oyees to which such39 compensation was paid. The data shall be provided monthly or quarterly and shall be40 due no later than the due date for the corresponding monthly or quarterly withholding41 tax returns, except that such data may be provided at the end of the year for the 202642 tax year.43 H. B. 1370 (SUB) - 2 - 26 LC 44 3495S (C) The department may require additional information of emplo yers and shall be44 authorized to adopt rules and regulations to provide for the ad ministration of this45 paragraph.46 (D) As used in this paragraph, the term:47 (i) 'Cash tips' means cash received by an individual in an occupation that customarily48 and regularly receives tips, including tips received from custo mers that are paid in49 cash or charged and, in the case of an employee, tips received under any tip-sharing50 arrangement, but only if such amount is paid voluntarily without any consequence in51 the event of nonpayment, is not the subject of negotiation, and is determined by the52 payor.53 (ii) 'Occupation that customarily and regularly receives tips' means any occupation54 which has been designated as such and given a Treasury Tipped Occupation Code as55 set forth in the Federal Register by the secretary of the treasury of the United States.56 Occupations excluded under Section 63 of the Internal Revenue C ode shall also be57 excluded for purposes of this paragraph.58 (E) This paragraph shall stand repealed and reserved on December 31, 2028."59 SECTION 2.60 This Act shall become effective on July 1, 2026, and shall be applicable to all taxable years61 beginning on or after January 1, 2026.62 SECTION 3.63 All laws and parts of laws in conflict with this Act are repealed.64 H. B. 1370 (SUB) - 3 -