MONTGOMERY, Ala. – Gov. Kay Ivey has signed into law legislation that offers wage earners an up to $1,000 tax deduction on overtime pay.
The proposal was a priority for Republicans in the recently-concluded legislative session after a previous law that eliminated all state income tax on overtime pay was allowed to expire due to its unanticipated impact on education revenue.
House Bill 527 from State Rep. James Lomax, R-Huntsville, also suspends the state’s portion of the grocery tax for two months beginning in May.
Ivey said the new law will offer needed financial relief for working families.
“Alabamians are the best workers out there. I applaud Rep. James Lomax and Sen. Arthur Orr for working with us to provide tax relief to those employees putting in overtime,” Ivey said in a news release. “I am also glad we are able to put a two month pause on the state’s portion of the grocery tax to help families across Alabama. Any time we can responsibly provide some relief for the hardworking people in our state, I am all for it.”
Lomax thanked the governor and his colleagues for supporting the legislation.
“HB527 provides meaningful, direct tax relief by delivering real savings at the grocery store for all families and rewarding hardworking Alabamians by recognizing the value of overtime work,” Lomax said. “I’m grateful to my colleagues in the Legislature for their support in getting this bill across the finish line, and I thank Governor Ivey for her continued leadership in supporting the people of Alabama.”
Sen. Arthur Orr carried the legislation in the Senate.
“I want to commend my colleagues in the Legislature for passing legislation that provides hardworking Alabamians with well-deserved tax relief on overtime pay, as well as some temporary tax relief at the grocery store that will benefit families across the state,” Orr said. “This reflects a strong commitment to easing the financial burden on Alabama families while encouraging productivity and economic growth, which are priorities Governor Ivey has emphasized since day one.”
The income tax reduction for overtime compensation will apply for tax years 2026 through 2028. The grocery tax suspension will occur May 1, 2026, through June 30, 2026.
(0) comments
Welcome to the discussion.
Log In
Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.