Financial expert Jay McGowan with the Welch Group provides insight into how Alabamians can benefit from the new overtime wage tax exemption.
says many Alabamians will benefit from this overtime wage tax exemption. However, not everyone qualifies and it doesn’t last forever. “It only applies to hourly employees. So, if you’re a salaried employee and you work more than your 40 hours a week, this does not apply to you,” McGowan said.
“It’s only people that are paid by the hour, and it’s actually in place all of 2024. And then it’s set to revert to where overtime wages are taxed in the state of Alabama in June of 2025.” The Certified Financial Planner says wages for hourly workers clocking over 40 hours a week will not be taxable in the state of Alabama, but they will be taxed federally. He says all of those hours can add up, and this time can be used as motivation to earn as much as possible before it comes to an end.
“Look at it as a 5% pay raise on any money you make over 40 hours a week,” McGowan said. “So, the state of Alabama income tax rate is about 5%, so if you work 50 hours a week, those 10 hours that you work, not only are they paid a time-and-a-half, so 150% of your hourly rate, but you’re also going to get another 5% bump because you saved 5% on state of Alabama income tax. That can add up.”
The wealth management expert says that extra money can be used to dig yourself out of a financial hole, pay off high-interest debt, increase 401 contributions, as well as build emergency funds.Democrat Tom Suozzi wins New York race to succeed George Santos in CongressWilliam ‘Bill’ Post, a key figure in the creation of the Pop-Tart, dies at 96
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