The One Big Beautiful Bill Act (OBBBA) requires changes to tax reporting on overtime and tips. However, the IRS announced that, as part of the phased implementation of the OBBBA, there will be no changes to tax returns or federal withholding tables for Tax Year 2025.
The IRS will not be making adjustments for 2025 related to the OBBBA, and forms will remain the same. Specifically, Forms W-2, existing Forms 1099, Form 941, and other payroll forms will not change for 2025. Federal income tax withholding tables will continue as they are. Employers should continue using current reporting and withholding procedures until 2026.
The IRS explained that delaying changes until 2026 is meant to reduce confusion during the upcoming tax filing season and give businesses and tax professionals more time to prepare for implementation.
“These decisions are intended to avoid disruptions during the tax filing season and to give the IRS, business, and tax professionals enough time to implement the changes effectively,” said the IRS in a written statement.
The IRS is developing guidance and updated forms for Tax Year 2026. One of the most significant changes will impact how tips and overtime pay are reported. The IRS has stated that additional guidance will be released in the coming months.
