Impacted Employers: All employers and payors
Effective Date: Immediate
Summary: The Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued Notice 2025-62 (the Notice) on November 5, 2025. The Notice offers transition-year penalty relief to employers, payroll services providers, and third-party settlement organizations (TPSOs) for tax year 2025 regarding new information reporting requirements under H.R. 1, “The One Big Beautiful Bill Act” (the Act), which was signed into law on July 4, 2025.
Additional guidance with respect to individual taxpayers, tipped occupations (including possible updates to the list of Treasury tipped occupation codes) and the exclusion for specified service trade or business will be released by the Internal Revenue Service (IRS) in the future.
Review the details here.
Next Steps – What this means for you
· Employers and payors are not required to provide employees or payees with a separate accounting of qualified overtime and cash tip amounts as defined by the Act for tax year 2025.
· Employers and payors are also not required to provide employees or payees with information concerning whether the employer or payor is a specified service trade or business, nor are they required to provide tipped employees or payees with a specified Treasury tipped occupation code (TTOC) for tax year 2025.
· While not required, the IRS encourages employers and payors to provide employees and payees with an approximate separate accounting of qualified overtime and cash tips, an indication of whether an employee or payee received tips from a specified service trade or business, and the TTOC (if applicable) to assist employees and payees with filing claims for applicable deductions on their individual tax returns.
· In the case of overtime, if you elect to provide employees with an approximate separate accounting of qualified overtime amounts for tax year 2025, you can refer employees to their final pay statement, which includes year-to-date totals of all overtime amounts paid (which may assist employees in claiming deductions for qualified overtime on their individual tax returns), or you will have access to payroll reports in which you can pull year-to-date overtime totals per employee and then can provide that information to employees using one of the following methods:
o Provide employees with a written statement identifying amounts (this could include the year-end pay statement reflecting year-to-date overtime amounts as discussed above or another statement)
o Make amounts accessible to employees via an online portal
o Report qualified overtime amounts in Box 14 of 2025 Form W-2
o Any other secure method
· In the case of cash tips, if you, as an employer or payor, elect to provide employees and/or payees with an approximate separate accounting of cash tip amounts for tax year 2025, you can refer your employees to their final pay statement, which includes year-to-date totals, or you will have access to payroll reports in which you can pull year-to-date tips totals per employee and then can provide that information to employees using one of the following options:
o Provide employees and/or payees with a written statement identifying amounts (for employees, this could include the year-end pay statement reflecting year-to-date tip amounts as discussed above or another statement)
o Make amounts accessible to employees and/or payees via an online portal
o Any other secure method
Note: Under the current Treasury guidance, employers may not utilize Box 14 of Form W-2 to report cash tip amounts.
· The IRS indicated that it plans to release additional guidance related to how individuals can utilize information provided by employers and payors to claim the applicable deductions. Additional information is also needed related to providing employees with TTOC codes and SSTB information.
ADP will provide additional updates related to the forthcoming guidance once it is released by the IRS.
· For the 2026 tax year and beyond, ADP continues to work on development efforts to support the Act for subsequent tax years. Additional communications concerning system changes and client impact for subsequent years will be provided shortly.