Compliance Stuff

A new federal law enacted last year provides a tax benefit to employees who receive overtime pay – but calling it a “No Tax on Overtime” law is a bit of misnomer. For starters, OT pay remains taxable and subject to withholding rules. And while a new income tax deduction may be available to some employees who work overtime, only a limited portion of  federally  required overtime compensation is tax deductible. We’ll clear up some of the biggest misconceptions surrounding these new rules and provide some key employer takeaways – which will become especially important this tax season and beyond as more employees learn the realities of these rules and the IRS cracks down on employers’ new filing and information reporting obligations.   Overview of “No Tax on Overtime” The One Big Beautiful Bill Act (OBBBA), which President Trump signed into law last year, includes a new federal income tax deduction related to overtime pay. This new deduction: applies for tax years  2025...

At a Glance The Policy Week in Review, prepared by Littler’s Workplace Policy Institute (WPI), sets forth WPI’s updates on federal, state, and local matters. FAA Forces Major U.S. Airlines to Cut Flights as Shutdown Continues  As the federal government shutdown continues, the Federal Aviation Administration said that it is forcing airlines to cut 10 percent of their flights at the nation’s busiest airports, effective Friday morning, November 7, to relieve pressure on air traffic controllers (who are working unpaid) and improve safety.   Multiple business groups and trade associations are not only concerned about the shutdown’s further strain on an already understaffed air traffic control system, but also worried about losses in revenue to industries and the overall impact to the economy as flights are postponed and canceled. For example, the American Hotel and Lodging Association is  reporting  that the shutdown has resulted in an estimated $650 million in lost hotel...

The Internal Revenue Service (IRS) released guidance on November 5, 2025, granting employers relief from tax penalties for failing to provide employees information related to their (1) “qualified tips” and (2) “qualified overtime compensation” that is otherwise required under the One Big Beautiful Bill Act (OBBBA). The relief applies only to the reporting obligation for the 2025 tax year. Related Links IR- 2025-82  (IRS announces no changes to individual information returns or withholding tables for 2025 under the One, Big, Beautiful Bill Act) IR-2025-92  (Treasury, IRS issues guidance listing occupations where workers customarily and regularly receive tips under the One, Big, Beautiful Bill) IR-2025-110  (Treasury, IRS provides penalty relief for tax year 2025 for information reporting on tips and overtime under the One, Big, Beautiful Bill) IRS Notice 2025-62  (Relief from Certain Penalties Related to Information Reporting Required in Connection with No Tax on Tips...