The AICPA has asked the Treasury Department and the IRS to provide transition relief and clear guidance for 2025 reporting related to new deductions for qualified tips and overtime compensation under the One Big Beautiful Bill Act. 

In a letter dated Oct. 17, the AICPA commended the Treasury and the IRS for their work on draft Forms W-2 and W-2C, which were updated to accommodate the new deductions and occupation codes enacted under Sections 70201 and 70202 of H.R. 1.

However, the organization raised concerns that employers and tax preparers currently lack a way to report these deductions, as “the 2025 version of these forms, which is the current revision, does not allow for this reporting.” 

The AICPA noted that the Act allows individuals to deduct up to $25,000 of qualified tips and up to $12,500 ($25,000 for joint filers) of qualified overtime pay, subject to income phaseouts. To help taxpayers comply in the absence of updated reporting fields, the AICPA recommended that Treasury “provide guidance including a safe harbor for businesses for the 2025 tax year allowing for alternative methods of reporting and use of alternative documentation...” 

Such methods could include information from pay stubs, employer letters, or other written records maintained by the employee. The organization emphasized that this relief would help taxpayers and preparers accurately substantiate these new deductions while maintaining compliance until formal reporting mechanisms are implemented for 2026.