A state income tax exemption on overtime pay that has been in effect since January 2024 will expire at the end of June unless the Alabama Legislature acts.

Democrats in the state House of Representatives support making the exemption permanent.

On Wednesday, they brought employees who have benefitted from the exemption to the Alabama State House to help make their case.

Mable McIntosh, a technician at the Georgia-Pacific plant in Pennington, which makes Angel Soft toilet paper and Sparkle paper towels, said lawmakers need to find a way to keep the exemption in place.

“A lot of our overtime is forced overtime,” McIntosh said. “It’s not that we’re volunteering for this overtime. It’s mandatory, because the companies that we work for, they face shortages, labor shortages. We have to work overtime to keep production going in those mills.

“To have that overtime be exempt, that’s important. That’s well deserved. And it’s something that should not be taken away from us now.”

The exemption came with an expiration date because of concerns about how much it would reduce state income tax revenues, which support public education.

The state Revenue Department reported last year that the exemption amounted to $230 million in the first nine months of 2024, far more than initial estimates.

“We hear all of this about the cost of it,” McIntosh said. “But, hey, find it somewhere else. Don’t put that burden on the workers of Alabama.”

House Minority Leader Anthony Daniels, D-Huntsville, sponsored the bill to create the exemption two years ago, saying it would allow workers to take home more of their pay and would help employers hire and retain workers during a time when some companies are struggling to fill jobs.

Republicans got behind the idea and Daniels’ bill passed with strong bipartisan support.

But the Revenue Department report on how much the exemption cost has created doubts about whether lawmakers will extend it.

Daniels has advocated for making the exemption permanent, saying that it has achieved its intent as an incentive for work and that the benefits outweigh the cost of the exemption because more people are working, paying income taxes, and spending some of their additional income on products that contribute to state and local sales taxes.

He noted that President Trump has advocated for an overtime exemption to the federal income tax.

“These are hard- working Alabamians that are putting into our economy,” Daniels said. “This not money that you’re just handing out. These are not handouts. These are dollars that they’re earning.”

Daniels said he is preparing a bill that would extend the exemption and would include a study to measure the full scope of the impact.

On Tuesday, the Alabama House passed several tax cut bills, including one to reduce the state sales tax on food from 3% to 2% effective Sept. 1.

Another bill doubled the state income tax exemption for withdrawals from individual retirement accounts and 401(k) accounts from $6,000 to $12,000, an exemption that applies to people 65 and older and is estimated to save taxpayers about $45 million a year.

A third bill changed dependent exemptions and standard deductions on state income tax that would allow taxpayers to save about $25 million a year.

The three bills passed without a dissenting vote and go to the Senate.

Daniels said the overtime tax exemption is more beneficial for workers and for the economy. He said a 1-cent cut in the food tax is not enough to offset the sharp rise in many necessities, like eggs.

He said the overtime exemption rewards hard work.

“You’re talking about your law enforcement that are working additional hours because they’re short-staffed,” Daniels said. “You’re talking about your firemen that working additional hours because they’re short-staffed.

“You’re talking about the worker at Hyundai. You’re talking about the worker at Austal. You’re talking the worker at Toyota. You’re talking about workers all across the state of Alabama.”

Nick Doty, a heavy equipment operator at the ABC Coke Plant in Tarrant, said he and his co-workers have seen the benefits of the tax exemption.

“For the first time, I feel like something has affected me immediately,“ Doty said. ”Not tax breaks for big companies. Not tax breaks for huge corporations. But tax breaks for the regular, everyday Alabamian.”