As the 2025 tax season approaches, the Internal Revenue Service (IRS) and the US Treasury Department have released guidance on claiming new federal deductions, enacted under President Donald Trump's 'One Big Beautiful Bill.' This legislation allows eligible workers to deduct cash tips and overtime pay, with the IRS providing detailed instructions and practical examples.
The guidance, issued late last week, explains how workers can determine their deductions without receiving separate accounting from their employers for cash tips and qualified overtime income. This clarification aims to streamline the process, especially since information returns such as forms W-2 and 1099 may not always separately report tips or overtime pay.
