An Alabama Department of Revenue official clarified existing guidance regarding overtime pay in an Aug. 14 email to Bloomberg Tax.
The official clarified existing departmental guidance implementing HB 217, which exempts certain overtime pay from state income tax for the period from Jan. 1, 2024, to June 30, 2025. The exemption applies to overtime paid rather than earned, so if an employee works overtime prior to June 30, 2025, but is not paid until after that date, the overtime pay is not exempt because it was not received within the exemption period.
Further, the exemption applies only to employees ...