House Bill 860 would exempt overtime and tips from state income tax; lawmakers debate fairness and fiscal cost

Representative John Simmons (District 109) presented House Bill 860 as a measure "to keep more of their money" for constituents by exempting overtime pay and tips from state taxation. Simmons said the bill is designed to incentivize additional work and to return money to workers, including those who earn tips: "We want to incentivize work. We don't want to disincentivize work," he said.

Committee discussion focused on both the policy rationale and the fiscal impact. Representative Strickler questioned why overtime was chosen as the targeted relief rather than other forms of compensation or targeted incentives for lower-paid workers; he observed there are many ways to prioritize tax relief. The fiscal note, discussed at length, included a low-end estimate of roughly $138 million and a high-end estimate near $391 million. Strickler said a high fiscal cost raises trade-offs with budget priorities and services while Representative Warwick, a small-business owner, said he sees many hourly workers and nurses who pay a penalty for extra hours and urged support.

Simmons and supporters framed the proposal as returning taxpayer dollars to workers rather than expanding government programs; critics stressed the bill picks a class of workers for relief and questioned affordability given ongoing budget choices. No committee vote was recorded at the hearing; the measure drew questions about distributional effects and the committee fiscal picture but also several expressions of support from members who said they favored helping hourly and tipped workers.