SB 454

This bill creates an income tax subtraction for certain qualified overtime compensation. The bill uses the definition of “qualified overtime compensation” from the Internal Revenue Code, which generally defines qualified overtime compensation as overtime compensation paid to a claimant under the federal Fair Labor Standards Act that is in excess of the claimant’s regular rate of pay. Only qualified overtime compensation that is included on statements furnished to the claimant pursuant to federal or state tax law is eligible to be subtracted under the bill. To claim the subtraction under the bill, a claimant must include the claimant’s social security number on the claimant’s tax return, and if the claimant is considered married for federal tax purposes, the claimant must file a joint tax return. The subtraction under the bill is generally limited to $12,500 per tax year for claimants, except that the limit is $25,000 per tax year for claimants who file a joint return. Further, the subtraction phases out to zero for claimants as modified federal adjusted gross income increases from $150,000 to $275,000, except that for claimants who file a joint return, the subtraction phases out to zero as modified federal AGI increases from $300,000 to $550,000.

Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.