On Aug. 8, the IRS said that, with its phased implementation of the One Big Beautiful Bill Act (OBBA), there will be no changes to certain information returns or withholding tables for Tax Year 2025 that are related to the new law.
Key points for tax year 2025 for OBBBA-related provisions are the following:
•Form W-2, existing Forms 1099, and Form 941 and other payroll return forms will stay unchanged for tax year 2025.
•Federal income tax withholding tables will not be updated for these provisions for the 2025 tax year.
•Employers and payroll providers should continue utilizing current procedures for reporting and withholding.
These decisions are meant to avoid interruptions during the tax filing season and to provide the IRS, business, and tax professionals sufficient time to implement the changes effectively, the IRS said.
The IRS stated it is working on new guidance and updated forms for tax year 2026. These will include changes to how tips and overtime pay are reported. The IRS will coordinate with employers, payroll providers, and tax professionals to pave the way for a smooth transition.
According to the IRS, it will be sharing more information in the coming months regarding how taxpayers can claim tax benefits related to the OBBBA when they file their tax returns. The Treasury Department and the IRS are creating added guidance for both reporting entities and individual taxpayers, the IRS announced.
In terms of the relevant provisions, according the Journal of Accountancy, tax relief for overtime and on certain tips are prioritized by the Trump administration.
Under the legislation, a temporary deduction of up to $12,500 ($25,000 in the case of a joint return) was provided for qualified overtime compensation received by an individual during a given tax year. The deduction starts to phase out when a taxpayer’s modified adjusted gross income exceeds $150,000 ($300,000 in the case of a joint return). This temporary deduction is available for tax years 2025 through 2028.
When it comes to tips, the legislation offered a temporary deduction of up to $25,000 for qualified tips received by an individual in an occupation that customarily and regularly receives tips. The deduction will be for workers receiving a Form W-2 as well independent contractors who get Form 1099-K, payment card and third party network transactions, or Form 1099-NEC (nonemployee compensation), or those who report tips on Form 4317, Social Security and Medicare Tax on unreported tip income.
This deduction applies to tax years 2025 through 2028. A transition rule allows employers required to furnish statements enumerating an individual’s tips for tax year 2025 to use “any reasonable method” to estimate designated tip amounts, the Journal reported.
For more information visit, One Big Beautiful Bill Act of 2025 Provisions.