South Carolina legislature proposes overtime income tax exemption bill

In a bold move to alleviate financial pressure on workers, South Carolina lawmakers have introduced House Bill 3793, which aims to exempt overtime income from state taxes. This proposed legislation, introduced on January 28, 2025, seeks to amend the South Carolina Code of Laws by adding a new section that would ensure all overtime earnings are not included in taxable income, effectively allowing workers to keep more of their hard-earned money.

The bill's primary provision states that all overtime income for individual taxpayers will be exempt from state taxes, with no withholding required on these earnings. Proponents argue that this measure will provide much-needed relief to workers, particularly in a state where many individuals rely on overtime to make ends meet. By reducing the tax burden on overtime, supporters believe it could stimulate local economies as workers have more disposable income to spend.

However, the bill has sparked debates among lawmakers and economists. Critics express concerns about the potential impact on state revenue, fearing that the tax exemption could lead to significant budget shortfalls. Some argue that while the intention is commendable, the long-term economic implications could hinder funding for essential services.

As the bill moves through the legislative process, experts are weighing in on its potential consequences. Advocates for the bill highlight its role in promoting fair compensation for workers, while opponents caution against the risks of prioritizing individual tax breaks over broader fiscal responsibility.

If passed, House Bill 3793 could reshape the financial landscape for many South Carolinians, allowing them to retain more of their income during a time when inflation and living costs continue to rise. The bill is set to take effect upon approval by the Governor, and its fate will be closely monitored as discussions unfold in the coming weeks.