Expanded Deductions for Tips & Overtime (2025)
Summary
Recent IRS guidance outlines deductions related to qualified tips and overtime compensation beginning in 2025.
What Changed
Guidance issued on treatment of qualified tips and overtime income
Applies to income earned starting January 1, 2025
Payroll and reporting considerations highlighted
Who Is Affected
Employees receiving tips
Workers earning overtime
Employers and payroll administrators
What This Means
Eligible taxpayers may see reduced taxable income, while employers should review reporting practices.
CTA
To understand how this may apply to your situation, contact Shah & Lee Associates, LLC.
Source: IRS Guidance
https://www.irs.gov/newsroom
