Notice 2025-62 provides welcome transition relief for 2025 W-2 and 1099 reporting of overtime and tips. Under the One Big Beautiful Bill Act ("OBBBA"), individuals can deduct tips and overtime pay on their income tax return, but employers must report new information to allow employees to claim the deduction. Although the Notice encourages employers to do their best to furnish employees with this new information, so employees can claim proper tax deductions under OBBBA, employers can now do their best without risk of substantial penalties for incorrect reporting.  Specifically, the Notice provides relief from Code section 6721 and 6722 penalties where the employer does not provide the new information on tips and overtime pay – but only for 2025 returns and statements.  Well done, IRS!  

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