The One, Big, Beautiful Bill Act of 2025 has a significant effect on federal taxes, credits and deductions. It was signed into law on July 4, 2025.
These provisions go into effect in 2025.
Key points for Tax Year 2025 relating to OBBB provisions:
- 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.
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.
For more information see > www.irs.gov/forms-pubs/about-form-941
Income Tax Relief and Deductions:
- No Tax on Tips (Sec. 70201)
Effective for 2025 through 2028, employees and self-employed individuals may deduct qualified tips received in occupations listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a Form W-2, Form 1099, or other specified statement furnished to the individual or reported directly by the individual on Form 4137.
- No Tax on Overtime (Sec. 70202)
Effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay (such as the “half” portion of “time-and-a-half” compensation) that is required by the Fair Labor Standards Act (FLSA) and reported on a Form W-2, Form 1099, or other specified statement furnished to the individual.
- No Tax on Car Loan Interest (Sec. 70203)
Effective for 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle, provided the vehicle is purchased for personal use and meets other eligibility criteria (Lease payments do not qualify).
- Deduction for Seniors (Sec. 70103)
Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000. This new deduction is in addition to the current additional standard deduction for seniors under existing law.
Guidance:
The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and other payors subject to the new reporting requirements.
For more information see > www.irs.gov/newsroom/one-big-beautiful-bill-act-of-2025-provisions
The One Big Beautiful Bill Act (OBBBA) signed into law July 2025, introduces two significant temporary tax deductions for individual taxpayers. Taxpayers can qualify to deduct a portion of qualified tips and overtime premiums that are shown on Forms W2, 1099-NEC, 1099-MISC or 1099-K. IRS announced that for tax year 2025 there will not be revisions to any of these forms, however, eligible taxpayers are required to have this information to report on the individual tax return to determine any applicable tax deductions for 2025.
To assist our customers in providing this critical information to employees and contractors, our E-File and Service Bureau platforms at www.efile4biz.com will have the option for employers to show the qualified tip and or overtime premium amounts on the recipient copies of Forms W2, 1099-NEC and 1099-MISC for Tax Year 2025.
Upload/Import Options:
You will also have the option to upload/import your data using Excel Template. There will be specific locations on the template to enter both Tip & Overtime amounts.
Example:
In addition, see attached PDF (Tipped Occupation Codes List).
For additional details on this process see > Instructional-Video-How-to-upload-using-the-Excel-template
TaxRight - LaserLink Software Users:
The software will allow quick and easy process of uploading forms to the E-File Site so they can be sent to the IRS and/or SSA. You will be able access your e-filing information for up to 4 years on the E-File Site platform. Plus receive instant communication as your forms are e-filed and accepted by IRS and/or SSA.
Please feel free to use the Software User Guide which is found within the Software as this will cover complete process. See the following > How-to-access-Software-User-Guide