Bill to eliminate Wisconsin’s income tax on overtime receives Assembly hearing

MADISON – Legislation co-authored by Sen. Rob Hutton (R–Brookfield) and Rep. Paul Melotik (R-Grafton) to eliminate Wisconsin’s income tax on overtime earnings received a public hearing in the Assembly Committee on Ways and Means at the State Capitol on Thursday.

Assembly Bill 461 creates a state income-tax subtraction for overtime pay so that earnings over the normal rate of pay under the federal Fair Labor Standards Act definition are not taxed. It is written to conform to the Internal Revenue Code as recently amended, minimizing conflicts between state and federal tax codes.

Under the bipartisan proposal, overtime pay reported on required wage statements would be eligible for the state tax subtraction. Like the federal provision, the bill includes reasonable limits to focus relief on those workers most likely to rely on overtime.

To ensure the bill’s tax relief is targeted to middle-income workers and those professions most likely to rely on overtime, AB 461 includes a cap of $12,500 per tax year ($25,000 for joint filers) and a phase-out for claimants whose adjusted gross income increases from $150,000 to $275,000 ($300,000 to $550,000 for joint filers).

“When Wisconsinites step up to cover extra shifts and keep our communities running, the tax code shouldn’t punish that effort,” Hutton said. “This bill helps workers keep more of what they earn and supports employers across sectors—from manufacturing and health care to public safety and hospitality.”

“We’re aligning with federal definitions to keep things simple and ensure there aren’t compliance headaches for workers or employers at tax time,” Hutton added. “This bill is a practical step to ensure hard-working Wisconsinites keep more of what they earn.”

NOTE: This press release was submitted to Urban Milwaukee and was not written by an Urban Milwaukee writer. While it is believed to be reliable, Urban Milwaukee does not guarantee its accuracy or completeness.