On January 23, 2026, the Internal Revenue Service (IRS) released Fact Sheet 2026-01 to help individuals claim overtime deductions under the One Big Beautiful Bill Act (OBBBA). In the fact sheet, the IRS confirmed that for the 2025 taxable year, employers are not obligated to provide qualified overtime compensation information to employees, however, starting in 2026, qualified overtime compensation, along with qualified tip information, must be reported to employees via the updated 2026 Form W-2.

Employers may share Fact Sheet 2026-01, along with IRS Notice 2025-69, with employees, as both documents provide guidance about how to claim and calculate  tip and overtime deductions under the OBBBA.

Additional information can be found on the IRS One Big Beautiful Bill Act of 2025 provisions website. HEC will continue to monitor guidance and provide updates as appropriate.  

Please note the information provided is for informational purposes only and may not reflect the most current regulatory developments.  We strive to keep our materials up to date, but there may be occasions when information becomes outdated.  Users are encouraged to verify the applicability of the content before relying on it for decision-making.  If you have any questions or concerns regarding the accuracy or relevance of the information, please contact us directly for assistance.