MADISON – State Sen. Rob Hutton (R–Brookfield) is circulating legislation to eliminate Wisconsin’s income tax on overtime earnings, leading a coalition of legislators co-authoring the pro-worker proposal.
The bill creates a state income-tax subtraction for overtime pay so that earnings over the normal rate of pay under the federal Fair Labor Standards Act definition are not taxed. It is written to conform to the Internal Revenue Code as recently amended, minimizing conflicts between state and federal tax codes.
“When Wisconsinites step up to cover extra shifts and keep our communities running, the tax code shouldn’t punish that effort,” Hutton said. “This bill helps workers keep more of what they earn and supports employers across sectors—from manufacturing and health care to public safety and hospitality.”
Under the proposal, overtime pay reported on required wage statements would be eligible for a state tax subtraction. Like the federal provision, the bill includes reasonable limits to focus relief on those workers most likely to rely on overtime.
“We’re aligning with federal definitions to keep things simple and ensure there aren’t compliance headaches for workers or employers at tax time,” Hutton added. “This bill is a practical step to ensure hard-working Wisconsinites keep more of what they earn.”
The bill is co-authored by a coalition of Wisconsin legislators including Reps. Paul Melotik, Bob Donovan, and Benjamin Franklin, and Sens. Van Wanggaard and Julian Bradley.
The bill—LRB-4460 and its Assembly companion—began circulating for co-sponsorship on Thursday.
