House Bill 826, the "Overtime Income Tax Exemption Act," would amend Georgia’s income tax code to exclude up to $10,000 of overtime wages per year from state income taxation for full-time hourly employees. The exemption applies only to compensation for hours worked beyond 40 in a week, and only if that income is already included in federal adjusted gross income and would otherwise be taxable by Georgia.
The bill also creates new employer reporting requirements beginning with tax year 2026. Employers would have to report to the Department of Revenue the total overtime compensation paid to full-time hourly employees, the number of employees receiving such pay, and any additional information needed to administer the exemption. The Department would then be required to report the fiscal impact to the General Assembly by January 31, 2028. The exemption is temporary and would sunset on December 31, 2030, unless extended or modified by the legislature.
Impact
HB826 would narrow Georgia’s state income tax base by carving out a limited exemption for overtime pay earned by full-time hourly wage workers. It would amend Code Section 48-7-27, which governs computation of taxable net income, and would affect both taxpayers and employers by changing how overtime compensation is reported and taxed. The bill also gives the Department of Revenue a new data-collection role and requires a fiscal-impact report to inform future legislative action.
Sentiment
Based on the bill text and the absence of recorded committee debate or votes in the provided materials, the overall sentiment appears supportive and policy-driven rather than contentious. The stated purpose emphasizes reducing the tax burden on workers, incentivizing productivity, and promoting economic fairness for hourly employees. The inclusion of a sunset date and a required fiscal report suggests an effort to balance tax relief with oversight of revenue effects.
Contention
The main likely point of contention is the revenue impact of exempting overtime pay from state income tax, since the bill explicitly anticipates possible revenue shortfalls and authorizes the General Assembly to adjust tax rates or identify alternative revenue sources. Another possible issue is administrative burden, because employers must provide recurring overtime compensation reports and the Department must track and analyze the exemption’s fiscal effects. Supporters are likely to focus on worker relief and fairness for hourly employees, while critics may focus on lost revenue, complexity, and whether the exemption disproportionately benefits certain workers or industries.