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One Big Beautiful Bill (OBBB) Updates – December 2025

The One Big Beautiful Bill (OBBB), signed into law on July 4, 2025 (Pub. L. 119-21), introduces a wide range of tax and payroll changes that will affect multiple filing seasons. The IRS and Treasury have been steadily releasing draft forms, guidance and proposed regulations to help employers and employees prepare. Here’s a comprehensive update covering the latest developments through December 2025.

Click here to watch a quick video overview of key OBBB updates.

October 2025 Updates

ERC claims cutoff

• IRS Announcement IR-2025-106 / Fact Sheet 2025-07 (October 22, 2025): IRS will not allow or refund Employee Retention Credits (ERCs) after July 4, 2025 for Q3/Q4 2021 if those claims were filed after January 31, 2024.

• IRS provided 8 FAQs to help employers understand the new restrictions.

November 2025 Updates

Penalty relief for 2025 reporting year

• IRS Announcement IR-2025-110 / Notice 2025-62 (November 5, 2025): Employers may receive penalty relieffor reporting cash tips and qualified overtime for 2025 if proper systems or procedures are not yet in place.

• Employers are encouraged to provide employees/payees with:

  • Occupation codes and accounting of cash tips

  • Separate accounting of overtime compensation

  • Access through online portals, written statements or Box 14 on Form W-2

Guidance for individual taxpayers

• IRS Announcement IR-2025-114 / Notice 2025-69 (November 21, 2025): Guidance for individuals on determining cash tips and overtime if employees do not receive separate accounting from their employer.

• Includes examples for tipped occupations and overtime credit calculations.

December 2025 Updates

2026 Forms & Publication

• Publication 15-T (2026): Updated tables reflecting OBBB provisions, used for federal income tax withholding.

• Form W-4 (2026): Updated for OBBB changes to Step 3, Step 4 and the exempt section.

• Note: The IRS tax withholding estimator has not yet been updated for OBBB and can currently only be used for 2025.

What This Means

• Employers should continue normal reporting for 2025, taking advantage of penalty relief if systems are not ready for OBBB-specific reporting.

• Employees should review any information provided by employers for cash tips and overtime to ensure accurate 2025 filings.

• 2026 forms are available, but tools like the withholding estimator may not yet reflect OBBB changes.

Resources

• IRS One Big Beautiful Bill Provisions

• October 22, 2025 – IRS Announcement IR-2025-106: ERC FAQs

• November 5, 2025 – IRS Announcement IR-2025-110: Penalty Relief

• November 21, 2025 – IRS Announcement IR-2025-114: Tips & Overtime Guidance for Individuals

• 2026 Publication 15-T

• 2026 Form W-4