Our Employee Benefits attorneys offer insights into the tax and benefits aspects of the OBBBA that employers should focus on in 2026. We review key employer obligations and planning considerations for 2026, highlighting where temporary transition relief applied in 2025 and should not be mistaken for lasting flexibility.
IRS Guidance on Claiming the New Tax Deduction for Tips and Overtime Pay
Takeaways
For tax years 2025 -2028, the One Big Beautiful Bill Act (OBBBA) allows employees to take an above-the-line tax deduction on qualified overtime pay and qualified tips.
On November 21, 2025, the Internal Revenue Service (IRS) released IRS Notice 2025-69, which explains how individual taxpayers can calculate and claim these deductions for the
IRS 2025 Penalty Relief: A Break for Employers under OBBBA’s Tax Reporting for Tips and Overtime
Takeaways
The Internal Revenue Service (IRS) released guidance on November 5, 2025, granting employers relief from tax penalties for failing to provide employees information related to their (1) “qualified tips” and (2) “qualified overtime compensation” that is otherwise required under the One Big Beautiful Bill Act (OBBBA). The relief applies only to the reporting obligation