(The Center Square) – A proposal to eliminate Wisconsin income tax on overtime pay is headed for a Tuesday committee vote.
Assembly Bill 461 would match a temporary federal income tax exemption on overtime that would apply to the extra pay received for working overtime up to $12,500 per year for an individual or $25,000 per year for joint filers.
The exemption is targeted at middle-income residents and is phased out for those making an adjusted gross income between $150,000 and $275,000 as an individual or $300,000 to $550,000 as a joint filer.
“Assembly Bill 461 is a practical step to ensure hard-working Wisconsinites keep more of what they earn at a time when their families need that money much more than the government,” Sen. Rob Hutton, R-Brookfield, said in testimony on the bill. “It ensures their sacrifice of personal and family time is not unduly punished by our tax code, supports staffing needs, and honors our state’s traditions of hard work and sacrifice.”
The current federal exemption applies to tax years 2025 through 2028 but the Wisconsin bill would not have an endpoint.
The bill would reduce Wisconsin tax collections by an estimated $176 million in fiscal year 2026 and then $150 million each year after that.
“Not adopting this policy in Wisconsin would further degrade Wisconsin’s tax competitiveness,” Evan Umpir, the General Counsel and Director of Tax, Transportation & Legal Affairs for the Wisconsin Chamber wrote in testimony supporting the bill. “For Wisconsin to remain competitive, we should make sure our tax code rewards hard work and productivity.”
