Don’t have the energy to slog through the 1,127 (or so) pages of the legislative text, amendments, and explanatory materials that comprise the final version of the “Big Beautiful Bill” to see how it impacts labor and employment law? Don’t worry – the Government Affairs team at Fisher Phillips has your back. Here’s an overview of the ways that the workplace will be impacted by the final budget bill signed by President Trump on July 4.

No Federal Tax on Overtime and Tips Tipped and hourly workers will be able to deduct significant portions of their tip and overtime income from federal taxes, potentially making hospitality and similar jobs more attractive.

Details

• Individuals must earn $150,000 or less in 2025 to eligible; for couples, the combined income limit is $300,000 (this threshold will be adjusted for inflation in future years)
• For tip deductions, employees must work in occupations where receiving tips is customary, such as servers, bartenders, hotel staff, hairstylists, etc. (The Treasury Department will publish a comprehensive list of eligible tipped occupations by October 2)
• Only cash tips (including those charged and those received under tip-sharing) and tips reported to employers for payroll tax purposes are eligible
• The maximum deduction for tip income is $25,000 per year
• For overtime deductions, they must receive OT pay as defined by the Fair Labor Standards Act (FLSA) (pay for hours worked beyond 40 in a workweek at a premium rate), and the deduction...

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