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No Tax on Overtime and Tips: No Reporting Changes for City Employers in 2025
The IRS announced there will be no changes to individual information on returns or withholding tables for 2025 under the One Big Beautiful Bill Act.
The Internal Revenue Service (IRS) has announced that, as part of its phased implementation of the One Big Beautiful Bill Act (OBBBA), there will be no changes to certain information reported on returns or to withholding tables for tax year 2025.
This means cities do not need to adjust their Form W-2 and Form 941 reporting processes for overtime in 2025. IRS forms issued by employers will remain unchanged, and the IRS is advising employers and payroll providers to continue to use current procedures for reporting and withholding.
It remains unclear how individuals will report overtime or tips to the IRS in order to claim OBBBA-related tax benefits when filing their personal tax returns. Employees are encouraged to consult their own tax adviser.
For 2026 and beyond, the IRS is developing new guidance for employers with additional information expected in the coming months.
Additional information is available from the IRS on the OBBBA: