Reduces federal adjusted gross income by the amount of overtime compensation earned by an individual in certain circumstances; defines overtime compensation.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8965A
SPONSOR: DeStefano TITLE OF BILL:
An act to amend the tax law, in relation to subtracting from federal
adjusted gross income any overtime compensation earned by an individual
PURPOSE:
Eliminates taxes on overtime pay
SUMMARY OF PROVISIONS:
Section I. Subsection (c) of section 612 of the tax law is amended by
adding a new paragraph 48.
Section 2. Sets the effective date
JUSTIFICATION:
This bill would eliminate state income taxes on overtime pay for all
workers in New York State. The purpose of this legislation would be to
provide financial relief for working families, especially for those in
industries where overtime is common practice, and to encourage work at a
time when many businesses are having a difficult time attracting and
retaining employees. As costs continue to rise, many employees rely on
overtime pay to support their families to meet their financial needs.
Taxing overtime pay reduces the value of these additional earnings.
LEGISLATIVE HISTORY:
New bill
FISCAL IMPLICATIONS:
To be determined
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to taxable years
beginning on and after January 1, 2026
STATE OF NEW YORK
________________________________________________________________________
8965--A
2025-2026 Regular Sessions
IN ASSEMBLY
August 13, 2025
___________
Introduced by M. of A. DeSTEFANO, SLATER, SEMPOLINSKI, ANGELINO, SIMP-
SON, DURSO, BENDETT, BLANKENBUSH, TAGUE, CHLUDZINSKI -- read once and
referred to the Committee on Ways and Means -- recommitted to the
Committee on Ways and Means in accordance with Assembly Rule 3, sec. 2
-- committee discharged, bill amended, ordered reprinted as amended
and recommitted to said committee
AN ACT to amend the tax law, in relation to subtracting from federal
adjusted gross income any overtime compensation earned by an individ-
ual
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subsection (c) of section 612 of the tax law is amended by
2 adding a new paragraph 48 to read as follows:
3 (48) Any overtime compensation received by an individual, to the
4 extent includible in gross income for federal income tax purposes. For
5 purposes of this paragraph, "overtime compensation" shall mean wages
6 earned for time an individual worked beyond such individual's normal
7 scheduled working hours. Provided, however, that for the purposes of
8 qualified overtime compensation as defined in section 225 (c) of the
9 Internal Revenue Code it shall include any compensation paid to an indi-
10 vidual that is in excess of the regular rate at which such individual is
11 employed if (i) such compensation is paid for work for a single employer
12 pursuant to an agreement between the employee (or labor organization
13 representing such employee) and employer entered into before the
14 performance of the work, and (ii) either such work is in excess of a
15 standard number of hours of such work for a specified period of time and
16 such agreement specifies that such standard number of hours for a speci-
17 fied time is not less than forty hours for a seven day period, or, if
18 the employee (including any crewmember or flight crewmember or rail
19 operating craft employee) and employer referred to in subparagraph (i)
20 of this paragraph are both covered by the Railway Labor Act, such work
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07557-03-6
A. 8965--A 2
1 is beyond scheduled or anticipated hours on duty that exceed a maximum
2 number of hours with respect to a specified period of time (as deter-
3 mined pursuant to such agreement).
4 § 2. This act shall take effect immediately and shall apply to taxable
5 years beginning on and after January 1, 2026.
