Food and beverage employers are navigating a fast-changing labor and compliance landscape, and the latest update — new overtime and tip-income reporting rules under the One Big Beautiful Bill Act (OBBBA) — introduces additional complexity. Starting in the 2025 tax year, these rules will directly affect how payroll is tracked and reported, and mistakes could lead to extra work, compliance issues, and unnecessary costs. Employers who plan can simplify payroll processes, avoid errors, and provide employees with accurate tax information, helping keep operations smooth and reducing headaches.
Employee Tax Breaks Bring Employer Responsibilities
Under the OBBBA, employees who earn tips and overtime pay might qualify for new tax deductions from 2025 to 2028. While these provisions could provide potential tax relief for employees, employers need to ensure accurate and timely reporting of all qualifying compensation. For food and beverage businesses, this means updating payroll processes so employees receive the correct compensation data for their tax filings.
W-2 Changes: What Employers Must Know
The IRS confirmed that Form W-2 will not be updated for the 2025 tax year to include the OBBBA’s new reporting requirements. Starting in 2026, however, employers will receive updated W-2s with new fields for certain overtime premium pay.
Even without a revised 2025 form, employers still need to provide employees with complete and accurate compensation information for the 2025 calendar year. Preparing early helps prevent reporting errors, compliance issues, and employee confusion.
Key Steps for Food and Beverage Employers
Starting with the 2025 tax year, employers are required to identify and record certain overtime premium pay for W-2 reporting. Check your systems now to make sure the correct data is captured, especially if your team relies on tips or variable overtime income.
What employers should do now
- Audit payroll systems to ensure tip and overtime data are accurately tracked and reported.
- Inform employees about the new potential tax benefits and the documentation they will need.
- Coordinate with your payroll partner (e.g., CBIZ) to prepare for reporting updates and upcoming IRS form revisions.
- Monitor IRS guidance for updates on W-2 forms and any additional compliance deadlines.
Stay Informed and Proactive
Navigating new overtime and tip-reporting rules can be complex, particularly when they affect both compliance and employee expectations. Preparing in advance can help your business stay organized, minimize errors, and ensure employees receive accurate tax information. For additional guidance and industry-specific resources, visit the CBIZ OBBBA Resource Page By planning proactively, your team can adapt smoothly to these changes and keep payroll operations running efficiently — turning a challenging regulatory update into an opportunity to strengthen your business.
For more information on how CBIZ can help you stay compliant with the OBBBA regulations, contact a member of our team.
© Copyright CBIZ, Inc. All rights reserved. Use of the material contained herein without the express written consent of the firms is prohibited by law. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein. Material contained in this publication is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their organization.
“CBIZ” is the brand name under which CBIZ CPAs P.C. and CBIZ, Inc. and its subsidiaries, including CBIZ Advisors, LLC, provide professional services. CBIZ CPAs P.C. and CBIZ, Inc. (and its subsidiaries) practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations, and professional standards. CBIZ CPAs P.C. is a licensed independent CPA firm that provides attest services to its clients. CBIZ, Inc. and its subsidiary entities provide tax, advisory, and consulting services to their clients. CBIZ, Inc. and its subsidiary entities are not licensed CPA firms and, therefore, cannot provide attest services.
