Memorandum 2025 Tax Deductions for Overtime and Tips__2.PAYM.0001.01

The recently passed One, Big Beautiful Bill grants employees tax deductions for tips and overtime wages. It is important to be clear that these benefits will be deductions on individual federal tax returns; they do not become tax-free wages in employee paychecks. Employers may be looking to communicate with employees on how these benefits will apply to them to help avoid any confusion. You may use this memorandum.