Will Alabama lawmakers cut taxes on overtime pay or groceries?

BIRMINGHAM, Ala. (WIAT) — The clock is ticking for some hourly workers in Alabama on whether or not any overtime they work would be taxed.

A law making overtime pay free from state tax in the state expires on June 30, and while some lawmakers want to make that law permanent, others argue that a grocery tax cut would have a greater impact.

Rep. Anthony Daniels, D-Huntsville, filed a bill that would make the overtime tax cut permanent. He said the economy has grown since the law went into effect last year.

“Families are now able to afford to buy groceries,” Daniels said. “Or to pay that extra tuition payment for their children, or do something nice for them and their families. Whether it’s buying a car, a down payment on a home.”

Rep. Ron Bolton, R-Northport, said a grocery tax cut recently passed by the House would help more people.

“You know, the grocery tax, everybody’s gonna buy groceries. While only about 15% of the population works overtime,” Bolton said. “So, we’re trying to give that benefit to a few more people and that’s the reason I think it’s probably not going to get a lot of traction this time.”

Education budget chairman Sen. Arthur Orr, R-Decatur, said lawmakers have to be careful with what they choose to pass. He said the overtime tax exemption cost the state over $400 million in revenue.

“We want to give money back to the people if we can afford to,” Orr said. “And, it’s their money to begin with. That’s always the goal, but we also have to fund education properly and state government properly. You know, it’s how close to the edge can you get without going over the edge?”

Daniels said the grocery tax cut would not have the same impact as cutting the tax on overtime. If passed, the state grocery tax would go from 3% to 2%, saving the average consumer approximately $1 on a $100 grocery bill.

“We’re talking about one penny on the dollar,” he said. “You tell me how that’s gonna make the difference for a family to be able to afford items at the grocery store? It’s not gonna make a difference. So, this is just smoke in mirrors, right? There’s no fire.”

The bill will first be taken up in the ways and means education committee in the House.