Penalty Relief for Reporting Tips and Overtime Under the One Big Beautiful Bill
IRS Notice 2025-62; IR-2025-110, Nov. 5, 2025
The IRS will not impose penalties on employers or payors for failing to separately report cash tips or qualified overtime compensation for tax year 2025, treating the year as a transition period under the One Big Beautiful Bill (OBBB).
Purpose of the Notice
For 2025, the IRS and Treasury are providing penalty relief for employers and payors that cannot yet comply with the new OBBB information reporting requirements for cash tips and overtime pay.
The IRS will treat 2025 as a transition year before enforcement begins.
Key Points of Relief
No penalties for not separately identifying cash tips or reporting the occupation of the tip recipient.
No penalties for not separately reporting qualified overtime compensation.
Relief applies only to tax year 2025 and only if the filer otherwise provides a complete and correct return or statement.
Forms W-2 and 1099 will not be updated for 2025 to include OBBB-specific reporting fields.
Background: OBBB Reporting Requirements
The One Big Beautiful Bill creat…
