HF415

Purpose

• To provide a new tax deduction (subtraction) for overtime pay under Minnesota individual income tax.

What the bill would change

• Adds a new subdivision (Subd. 36) to Minnesota Statutes 2024 section 290.0132.
• Defines overtime pay as wages, salaries, tips, and other employee compensation earned for hours worked in any workweek that exceed the maximum workweek for the employee under Minnesota’s Chapter 177 or under the federal Fair Labor Standards Act (FLSA) at 29 U.S.C. 207.
• Declares that the amount of overtime pay is a subtraction from taxable income.

How it would work in practice

• If you earn overtime, the overtime pay amount could be subtracted from your state taxable income, potentially lowering your Minnesota income tax.
• The definition ensures overtime includes not just base wages but also salaries, tips, and other compensation earned for hours beyond the standard workweek.

Key terms and concepts

• Overtime pay
• Subtraction (from taxable income)
• Taxable income
• Wages, salaries, tips, and other employee compensation
• Workweek
• Maximum workweek
• Chapter 177 (Minnesota labor law)
• 29 U.S.C. 207 (FLSA overtime standard)

Significance and potential impact

• Introduces a new tax relief specifically tied to overtime earnings.
• Aligns state tax treatment with overtime rules defined by both state law (Chapter 177) and federal law (FLSA).
• Could reduce state tax liability for workers who accrue overtime.

Status and date (context)

• Text shown is part of an introduced bill; specific effective date is not stated in the excerpt.

Relevant Terms - overtime pay - subtraction - taxable income - wages - salaries - tips - employee compensation - workweek - maximum workweek - Chapter 177 - 29 U.S.C. 207 - Minnesota Statutes 290.0132