The tax and spending law known as the One Big Beautiful Bill Act (OBBBA) has caused a sea change in the taxability of employee compensation and will have several effects on HR. This article highlights 15 takeaways from the new law for HR professionals.
1. Identify weekly overtime. The new “qualified overtime” deduction applies to the 2025 tax year (through taxable year 2028) only for weekly overtime under the Fair Labor Standards Act (FLSA). So, employers will have to find a way to identify only weekly overtime on Form W-2, said Nisha Verma, an attorney with Dorsey & Whitney in Costa Mesa, Calif., and Palo Alto, Calif. “Qualified overtime” means overtime paid according to the FLSA, which requires time and a half after 40 hours per week, Verma noted. States including Alaska, California, Colorado, and Nevada, as well as Oregon in certain industries, have daily overtime requirements that exceed federal law. Employers will have to set up systems to separate overtime paid under the FLSA from overtime paid for other reasons, she said.
2. Update withholding procedures. Starting in 2026, HR will need to update its withholding procedures, said Michael Mahoney, an attorney with Ogletree Deakins in Morristown, N.J.
3. Don’t misclassify nonexempt employees as exempt. If employers are tempted to convert nonexempt employees to exempt to avoid the “reporting headaches” connected with the overtime deduction, they should halt any such efforts, Verma said. “There is an entirely...
The Ministry of External Affairs (MEA) on Sunday rejected claims doing rounds on social media related to India-US trade relations. "Disinformation being spread on X," MEA posted on X along with tw...