Takeaways

• The new bill is broader than the FLSA and, if passed, would apply to all businesses.
• The bill proposes a reporting requirement for all Georgia businesses.
• If the Georgia bill is passed, there may be greater incentive for employees to bring overtime claims under the FLSA.
• If the bill becomes law, there may be a tax incentive to switch some salaried employees to an hourly rate.

Related link

• House Bill 375 (text)

Article

A bill introduced in the Georgia state legislature, if passed, would exclude overtime compensation from Georgia state income taxes starting in 2026.

House Bill 375 (H.B. 375), introduced on Feb. 11, 2025, would exclude from taxation any income received by a “full-time employee paid by an hourly wage as compensation for work performed in excess of 40 hours a week, and any amount paid as overtime compensation in accordance with the federal Fair Labor Standards Act” (FLSA). There have been promises of similar laws at the federal level, but no similar federal exclusion yet.

The proposal raises implications for Georgia businesses to consider:

1. H.B. 375 is broader than the FLSA and applies to all businesses.

The bill would impact a larger number of both employers and employees than the FLSA. Not all employers are covered by the FLSA and not all employees who are paid an hourly wage are covered by the FLSA. All employers and hourly wage employees, however, would be covered by H.B. 375.

By example, the FLSA does not apply to small businesses with an...

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