IRS Delays Withholding and W-2 Changes for the One Big Beautiful Bill Act

The IRS has confirmed that taxpayers and tax professionals will not see new withholding tables or updated Form W-2 instructions in 2025 to reflect the provisions of the One Big Beautiful Bill Act (OBBBA).

What Was Expected

Many in the tax community anticipated that the IRS would adjust payroll withholding tables and update Form W-2 reporting to account for significant OBBBA changes - like the new rules for tips and overtime pay. These updates would have provided clarity for employers, payroll processors, and employees alike.

What’s Actually Happening

Instead, the IRS has announced there will be no changes in 2025 to:

• Federal income tax withholding tables

• Form W-2 reporting instructions (including new Box 14 codes)

That means employers and payroll providers will continue to use the existing withholding guidance for now, and workers may not see immediate adjustments in their take-home pay, even if they qualify for new deductions or exemptions under the OBBBA.

What This Means for Employers

Without updated tables or forms, employers will need to:

• Continue using the current withholding rates for payroll.

• Track tip and overtime amounts internally to ensure year-end reporting is correct.

• Work closely with their CPA or payroll provider to adapt to the new law despite the lack of IRS updates.

What This Means for Employees

If you’re expecting a bigger paycheck due to OBBBA changes, it might not happen automatically in 2025. Instead, you may see the benefit when you file your tax return next year. It will be especially important to:

• Keep good records of your tips and overtime.

• Review your year-end W-2 carefully.

• Consider adjusting your W-4 to reflect your anticipated tax situation.

Why This Matters

Delays in IRS implementation create uncertainty and extra administrative work. As one tax professional commented, “We wish for new Box 14 codes and standard paystub descriptions, but we won’t get anything this year.”

Bottom Line: The OBBBA brings substantial changes, but the IRS will not update withholding tables or W-2 forms for 2025. Employers and employees will need to take extra care to track information accurately and plan for the changes at tax time.

At Kamish & Associates, we’re following these developments closely and will provide updated guidance as new information becomes available. If you’d like us to review your payroll setup or personal withholding strategy in light of the OBBBA, now is the time to schedule a planning session.