Eliminating income tax on overtime wages will let hardworking Wisconsinites keep more of their hard earned money.
FOR IMMEDIATE RELEASE
November 1, 2023
Delafield, WI – Today, the Institute for Reforming Government (IRG) released a new tax reform opportunity as lawmakers in Madison continue to debate how best to deliver tax relief to Wisconsinites. IRG’s plan would target middle class workers and their families as they contend with continued economic hardship and inflation by eliminating income tax on overtime wages – saving the average Wisconsin manufacturing worker $323 annually.
WHAT IT IS
IRG’s proposal 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.
WHY IT MATTERS
The cost of inflation is real for families across Wisconsin. On average, families are spending $709 more per month than they were just two years ago. Eliminating income tax on overtime pays directly benefits middle class families – allowing them to keep the fruits of their overtime work. Wisconsin’s economy has also been hampered by a worker shortage. Allowing workers to keep overtime wages will incentivize them to fill the gaps left by this shortage.
WHAT’S NEXT
IRG has been at the forefront of the discussion on tax reform in Wisconsin and released a plan to eliminate the income tax in December of 2021. Earlier this year, IRG released a tax reform playbook and explained the reasons why Wisconsin needs tax reform. As the legislature and the Governor work to find a mutually agreeable tax reform package, incremental tax reforms like this could be the most realistic way to deliver real relief for Wisconsin families and workers. A briefing on the elimination of income tax on overtime pay can be found here.
Have questions? Reach out to IRG’s Alex Ignatowski at [email protected].
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The Institute for Reforming Government is a non-profit 501(c)3 organization that seeks to simplify government at every level by offering policy solutions to thought leaders in American government in the areas of tax reform, government inefficiency, and burdensome regulations.
To learn more about the Institute for Reforming Government, click here.