The IRS recently announced (IR-2025-82) that there will be no changes to individual information returns or federal withholding tables for tax year 2025 related to the changes made by the One Big Beautiful Bill Act of 2025 (OBBBA), including the new individual deductions for qualified overtime compensation and qualified tips (see Grant Thornton’s article on the compensation and benefits impacts from the new legislation here).
The IRS says it has implemented this strategy to minimize disruption during the 2025 tax return filing season.
Specifically, the IRS announced that:
- Form W-2, existing Forms 1099, and Form 941 and other payroll return forms will remain unchanged for tax year 2025.
- Federal income tax withholding tables will not be updated for these provisions for tax year 2025.
- Employers and payroll providers should continue using current procedures for reporting and withholding.
Looking ahead to 2026, the IRS has released a draft version of Form W-2 that introduces new reporting elements aligned with OBBBA’s provisions. Specifically, the draft includes two new codes (“TT” and “TP”) for reporting qualified tips and qualified overtime compensation, respectively.
In addition, Box 14 of Form W-2 will feature a new field for occupation, which is relevant for employees claiming the qualified tip deduction. The IRS also indicated that additional information will be shared in the coming months about how taxpayers can claim OBBBA-related tax benefits when they file their returns, and that additional guidance will be provided for both reporting entities and individual taxpayers.
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