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The IRS recently updated the FAQs about the “No Tax on Overtime” Deduction under the Working Families Tax Cuts.

By: IRS, Illinois Department of Revenue

Some important points for business taxpayers include:

  • The removal of information that was applicable only to the 2025 tax year
  • Clarification on the limits and timing of the qualified overtime compensation deduction
  • Additional information on coverage and exemptions under the FLSA
  • Detailed information on Form W-2, Form 1099-MISC, and Form 1099-NEC requirements applicable to employers and payors of qualified overtime compensation
  • Information on federal income tax withholding procedures related to qualified overtime compensation
  • Information on the requirement that qualified overtime compensation must be separately reported on Form W-2 to claim the deduction

Full details are available in Fact Sheet 2026-13