- The Michigan state budget deal includes no more state tax on overtime pay.
- The provision mirrors a federal change that is effective January 1 of this year.
- Jackson workers are saying the deal gives them something to look forward to…and an incentive to get more work done.
This week's state budget deal includes no state tax on overtime pay. I spent Friday — Manufacturing Day — talking to some of our neighborhood workers about what this means for them personally and professionally.
CHECK OUT WHAT THEY HAD TO SAY IN THIS THE VIDEO:
Mandi Herzberg, a programmer/fabricator at Drushal Fabricating, says her shop is "absolutely swamped — I work overtime every single week."
Every single week? I ask her. So this will make a big difference probably?
"Yes. Absolutely," she says.
The state budget deal eliminating tax on overtime pay mirrors the elimination of federal income tax on the 50% extra you earn on top of your regular salary when you work overtime.
At the federal level, it came into force starting January of this year. The same exemption for overtime pay will now apply to our state taxes if Governor Gretchen Whitmer signs the budget.
What does it mean in real terms? Say someone earns $20 an hour and puts in five hours of overtime per week. They'd keep an extra $110 per year instead of paying that money in state income tax.
I talked to Hayden Carlisle, who is a welder at Drushall Fabricating, and asked him what he thinks of no tax on overtime pay.
"I think it's pretty awesome," he said. "I think I'll be able to reinvest the money into tools, have more money in my pocket to go on vacations, and have more fun."
Herzberg says: "I think that our industry is struggling to find employees that want to work even the normal 40 hours per week, let alone asking them to work overtime."
What do they think in terms of the environment at work —would more people look at these kinds of jobs now that they know they can do overtime and not get taxed?
"Yes, I really think they would think about it twice instead of thinking 'I don't want to work overtime'," says Carlisle.
Herzberg says: "I feel like this kind of softens the blow and gives everybody more incentive to get more work done."
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