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Alabama workers will pay no overtime tax starting Jan. 1

The overtime tax cut passed the legislature last session unanimously and appears to be just as popular with workers and businesses.

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Hourly workers across Alabama will get a 5-percent pay increase on overtime starting Jan. 1, thanks to a bill sponsored by House Minority Leader Anthony Daniels and signed by Gov. Kay Ivey last week. 

The ceremonial signing at Montgomery’s Hyundai auto plant underscored the importance of the legislation, which businesses and state officials touted as a means to recruit top-level employees and prevent them from seeking jobs in other states. 

“This is something that affects all workers, and it doesn’t matter if you’re a Democrat or a Republican, white or Black or conservative or liberal,” Daniels said. “This puts extra money into the pockets of the men and women who need it most in this state, and it does so without costing the businesses of this state a dime.”

Daniels’ legislation drew widespread support from lawmakers on both sides of the aisle and from the Business Council of Alabama and Alabama AFL-CIO. It passed unanimously during the last session.

However, it did face some pushback from at least one state senator, Arthur Orr, who claimed the bill’s $45 million pricetag – which would affect the state’s Education Trust Fund – was too much. Orr attached an amendment to the bill that capped the cuts at $2,000 per worker, meaning the average worker would save just $100 per year. 

After pushback from all sides, Orr eventually relented. 

“This is going to generate more tax dollars from folks spending this money on things they need,” Daniels said at the time. “This isn’t money that’s going into a savings account. This is money that’s going to put food on the table, help pay for a beach vacation, put gas in the tank for people. This legislation will not cost the state $45 million.”

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Josh Moon is an investigative reporter and featured columnist at the Alabama Political Reporter with years of political reporting experience in Alabama. You can email him at [email protected] or follow him on Twitter.

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