New York Senate Bill S03914

New York 2025-2026 Regular Session

• Introduced: 1/30/25
• Refer: 1/30/25
• Refer: 1/7/26

Caption

Reduces federal adjusted gross income by the amount of overtime compensation earned by an individual in certain circumstances; defines overtime compensation.

Summary

S03914 would amend New York’s tax law to allow individuals to subtract certain overtime compensation from federal adjusted gross income when calculating New York taxable income. The bill defines “overtime compensation” as wages earned for time worked beyond an individual’s normal scheduled working hours, and it also includes certain qualified overtime payments under the Internal Revenue Code, including some collectively bargained arrangements and certain railroad/rail labor situations. The subtraction would apply to taxable years beginning on or after January 1, 2026. In practical terms, the bill would reduce state income tax liability for workers who earn qualifying overtime pay, while leaving the federal tax treatment unchanged. It would add a new deduction-like subtraction under section 612 of the tax law, affecting individual taxpayers who receive overtime compensation that meets the bill’s definition. The measure is framed as a tax relief provision for wage earners, especially those who regularly work beyond standard hours. The available record shows no committee transcript or recorded votes, so there is no documented debate or formal opposition in the provided materials. Based on the bill text and sponsorship pattern, the general sentiment appears supportive among its sponsors, who are seeking to provide tax relief tied to overtime earnings. However, because the bill was referred and recommitted to the Senate Committee on Budget and Revenue, it likely implicates revenue concerns for the state budget. The main point of contention is likely fiscal impact: exempting overtime from state income tax would reduce state revenues and could raise questions about whether the benefit is targeted fairly and how broadly it should apply. Another possible issue is administration and eligibility, since the bill uses both a general overtime definition and a more technical federal definition for qualified overtime compensation, which could create complexity for taxpayers, employers, and the Department of Taxation and Finance.

Impact

The bill would amend section 612 of the New York Tax Law to create a new subtraction from federal adjusted gross income for qualifying overtime compensation, thereby lowering New York taxable income for affected individuals. It would apply beginning with taxable years starting January 1, 2026, and would primarily affect individual income taxpayers, employers reporting overtime wages, and the state tax administration system. The measure does not change federal tax law, but it would alter how New York computes state personal income tax.

Sentiment

No committee transcript or vote record is provided, so there is no direct evidence of floor or committee debate. The bill’s sponsors indicate a favorable view of providing tax relief for overtime workers, and the text itself reflects a pro-taxpayer policy choice. At the same time, the referral to the Budget and Revenue Committee suggests the proposal is being considered in the context of state revenue effects, which is the most likely source of caution or resistance.

Contention

The principal contention is fiscal: opponents may argue that excluding overtime pay from state taxable income would reduce revenue and could complicate budget planning. A second issue is policy design—whether the benefit should be limited to certain workers or overtime structures, and whether the bill’s definitions are clear enough to administer consistently. Stakeholders most likely to focus on these concerns include budget analysts, tax administrators, and employers, while labor groups and overtime-earning workers would likely support the measure.