11/25/2025
Legally Speaking with Taft - No Tax on Overtime?
Legally Speaking
by Marc Fleischauer and Bob Dunlevey
Taft/
No Tax on Overtime?
Preparing Your Payroll for the New Deductions
On November 21, 2025, the IRS released Notice 2025-69, providing essential transition-year guidance for the new federal income tax deductions for qualified overtime compensation created under the One, Big, Beautiful Bill Act (OBBBA). Although the deductions apply to individual workers, the rules have immediate consequences for employers’ payroll operations and employee communications beginning with the 2025 tax year.