AN ACT to allow an income tax deduction for overtime compensation, up to two thousand five hundred dollars of bonus pay, and tips.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 105‑153.5(b) reads as rewritten:

(b)      Other Deductions. – In calculating North Carolina taxable income, a taxpayer may deduct from the taxpayer's adjusted gross income any of the following items that are included in the taxpayer's adjusted gross income:

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(17)      Any amount received as overtime compensation pursuant to sections 206 and 207 of the Fair Labor Standards Act, as amended. In the case of a married couple filing a joint return, each spouse may qualify separately for the deduction allowed under this subdivision. To claim this deduction, the taxpayer shall provide any information required by the Secretary.

(18)      The amount received as bonus pay not to exceed two thousand five hundred dollars ($2,500). For purposes of this subdivision, bonus pay means supplemental wages, as defined in 26 C.F.R. § 31.3402(g)‑1, not including tips, paid to an employee as a cash award and in recognition of the employee's outstanding work, suggestions, or similar workplace dedication. In the case of a married couple filing a joint return, each spouse may qualify separately for the deduction allowed under this subdivision. To claim this deduction, the taxpayer shall provide any information required by the Secretary.

(19)      Any amount received as tips that are required to be reported to the taxpayer's employer pursuant to section 6053(a) of the Code.

SECTION 2.  This act is effective for taxable years beginning on or after January 1, 2025.