No Tax on Tips or Overtime? What Employers Need to Know for 2025

Picture of The Kaizen Team The Kaizen Team · August 14, 2025

payroll + hr compliance business & tax strategy
No Tax on Tips or Overtime? What Employers Need to Know for 2025
No Tax on Tips or Overtime? What Employers Need to Know for 2025
0:35
 

The “no tax on tips or overtime” change sounds straightforward, but it’s not. Brian Bride explains how the new deductions in the One Big Beautiful Bill are expected to work, what business owners should be doing now, and why 2025 is considered a transition year.

Key takeaways include:
 Who may qualify based on occupation
 Why W-2 coding matters more than ever
What to expect from the IRS and what’s still unclear

These deductions don’t apply automatically. To protect your business and help employees get the benefit, accurate payroll reporting is essential.

 

Your Payroll Department (YPD) is part of the Kaizen CPAs family. YPD specializes in payroll and HR compliance for small businesses, providing the hands-on support to get your people paid and stay compliant without having to become an expert yourself.

The information in this article is provided for general educational purposes and reflects conditions as of the publication date. It does not constitute legal, tax, or compliance advice. For guidance specific to your business, consult a qualified professional.

How Your Unemployment Tax Rate Gets Set (And How to Keep It Low)

How Your Unemployment Tax Rate Gets Set (And How to Keep It Low)

Unemployment tax is one of those payroll costs that quietly adds up, and most employers have no idea they have any control over it. You do. Your rate...

payroll + hr compliance
Read, Watch, or Listen →
The I-9 Errors That Used to Get a Warning Now Get a Fine

The I-9 Errors That Used to Get a Warning Now Get a Fine

Most business owners know they're supposed to collect an I-9 when they hire someone. What a lot of them don't realize is how easy it is to get it...

payroll + hr compliance
Read, Watch, or Listen →
Why Business Growth Isn’t Linear (and What Actually Happens Instead)

Why Business Growth Isn’t Linear (and What Actually Happens Instead)

Most business owners picture growth as a straight line. Work hard, get results, keep climbing. But that's not really how it plays out in practice. ...

business & tax strategy
Read, Watch, or Listen →