Budget reformers pitch tax-free overtime in Wisconsin



(The Center Square) – The latest tax reform plan at the Wisconsin Capitol doesn’t include everyone, but budget reformers say it’s a start.

The Institute for Reforming Government on Wednesday introduced a plan that would make overtime essentially tax free.

IRG’s plan would eliminate income tax on overtime wages and bonuses up to $2,500.

“In practice, workers would not pay income taxes on wages earned for any work in excess of 40 hours during a work week. Families will have more money in their pockets to deal with the rising prices of necessities like gas, energy, and groceries. This will also provide an incentive for workers to help fill Wisconsin’s worker shortage,” the Institute said in a release.

IRG’s Alex Ignatowski told The Center Square the idea is not just to help working families but to restart the conversation about tax reform in Wisconsin.

“We need to continue the discussion on tax reform and concepts like this will help do that. The governor wants to see something that will help workers and there’s no way to argue that this bill does not do just that,” Ignatowski said.

Workers who earn overtime, obviously, will benefit the most from the plan. Ignatowski admits that means some workers in the state won’t see any tax breaks from the plan.

“It includes small bonuses, so some salaried employees would be included. But yes, it definitely leaves some people out. We’d like to fully eliminate income tax in Wisconsin, but given the current environment in Madison, we hope this is a compromise that can gather consensus. It could also be packaged with the retirement tax elimination bill,” he added.

Alabama has a similar piece of legislation that’ll take effect next year. But that plan will only last until mid-2025. North Carolina is currently considering similar legislation.

IRG has been pushing for sweeping tax reform in Wisconsin for a while, including a pitch earlier this year to move Wisconsin to a flat tax.

Wisconsin Republican lawmakers have approved two income tax cuts for the state, but Gov. Tony Evers vetoed the first and is promising to veto the next as well.



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