Takeaways

For tax years 2025 -2028, the One Big Beautiful Bill Act (OBBBA) allows employees to take an above-the-line tax deduction on qualified overtime pay and qualified tips.

On November 21, 2025, the Internal Revenue Service (IRS) released IRS Notice 2025-69, which explains how individual taxpayers can calculate and claim these deductions for the tax year 2025, even if their employer does not provide any separate documentation identifying which portions of overtime or tip income may qualify for the deduction.

IRS and Treasury Guidance

• IR-2025-82 (IRS announces no changes to individual information returns or withholding tables for 2025 under the One, Big, Beautiful Bill Act)
• IR-2025-92 (Treasury, IRS issues guidance listing occupations where workers customarily and regularly receive tips under the One, Big, Beautiful Bill)
• IR-2025-110 (Treasury, IRS provide penalty relief for tax year 2025 for information reporting on tips and overtime under the One, Big, Beautiful Bill)
• IRS Notice 2025-62 (Relief from Certain Penalties Related to Information Reporting Required in Connection with No Tax on Tips and Overtime)
• IR-2025-114 (Treasury, IRS provide guidance for individuals who received tips or overtime during tax year 2025)
• IRS Notice 2025-69 (Guidance for Individual Taxpayers who received Qualified Tips or Qualified Overtime Compensation in 2025)

Jackson Lewis Resources:

• Federal OBBBA Round-Up: What Employers Need to Know Now – Jackson Lewis

Background

Employer...

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