DATE: Thursday, December 11, 2025
Under the No Tax on Overtime provision of the One, Big, Beautiful Bill (Public Law 119-21), the IRS has granted IBC a transition exception for the 2025 tax year. Because of this, your 2025 W-2 will not list overtime separately.
To correctly report overtime pay you earned in 2025, you will need to use the Flexible Reporting Method described below when filing your 2025 tax return.
Flexible Reporting Method
For overtime earned before January 1, 2026, employees may use any reasonable method approved by the Department of the Treasury to identify and calculate the overtime pay that qualifies for the deduction.
If you earned overtime in 2025, please do the following:
- Review your Earnings and Leave Statements to determine the amount of qualified overtime you received.
- Follow the IRS guidance titled “Guidance for Individual Taxpayers Who Received Qualified Tips or Qualified Overtime Compensation in 2025” when completing your 2025 tax return.
Resources:
- One, Big, Beautiful Bill provisions at IRS.gov
- H.R.1 – An act to provide for reconciliation pursuant to title II of H. Con. Res. 14.
- Guidance for Individual Taxpayers who received Qualified Tips or Qualified Overtime Compensation in 2025
Questions:
- For all payroll related questions, please contact the Customer Support Center.