State Senator Rob Hutton (R–Brookfield) has introduced legislation aimed at removing Wisconsin’s state income tax on overtime earnings. The proposal is supported by a group of co-authors in the legislature.
The bill would create a subtraction for state income tax purposes on overtime pay, ensuring that earnings above the standard rate as defined by the federal Fair Labor Standards Act are not taxed at the state level. The measure is designed to match recent changes in the Internal Revenue Code, reducing potential conflicts between state and federal tax regulations.
“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.”
If passed, workers would be able to subtract eligible overtime pay reported on required wage statements from their taxable income. The bill also includes limits similar to those found in federal law, targeting relief toward employees who depend most on overtime work.
“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.”
Co-authors include Representatives Paul Melotik, Bob Donovan, Benjamin Franklin, and Senators Van Wanggaard and Julian Bradley. The Senate version of the bill is LRB-4460.
Hutton was elected as a Republican representative for Wisconsin’s 5th Senate district in 2023, succeeding Dale Kooyenga.
