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Subcommittee moves to carry over overtime income‑tax subtraction bill
Summary
Sen. McDougall presented SB 143 to allow a Virginia income‑tax subtraction for overtime wages; committee members raised horizontal equity and fiscal questions, and the measure was carried over to give tax staff time to assess budget impacts.
Senator McDougall introduced SB 143, a proposal to allow Virginians to subtract overtime wages from taxable state income so that extra pay earned beyond regular work would not be taxed by Virginia. McDougall framed the change as an affordability step for workers facing higher living and energy costs.
Committee members expressed concerns about treating income differently based on how it is earned and about unknown fiscal implications. The chair warned the approach could introduce horizontal tax inequities across taxpayers. After discussion, a motion was made and seconded to carry SB 143 over for the year to allow staff to produce additional information; the subcommittee approved the motion by voice vote.
What’s next: Tax staff will be asked to develop fiscal estimates and equity analyses before the bill returns to the subcommittee.
