Employers: The IRS recently updated its FAQs on the qualified overtime pay tax deduction for employees created under the One Big Beautiful Bill Act. The guidance provides new details on how you must identify, calculate and report qualified overtime income. For example, it clarifies that only FLSA-mandated overtime premiums qualify, notifies employers that separate reporting on Forms W-2 is required beginning in 2026, and confirms that overtime pay remains subject to federal income tax withholding. These changes may call for payroll system updates and a closer review of employee classifications and overtime practices. Contact us for help preparing for the new requirements.
