Tips and overtime guidance; OBBB penalty relief; 2026 interest rates; recent disaster tax relief and other tax news
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e-News for Small Business November 25, 2025
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Issue Number: 2025-20
Inside This Issue
* Additional guidance provided about tips or overtime received in tax year 2025 [ #First ]
* Penalty relief guidance for reporting on tips and overtime under the One, Big, Beautiful Bill [ #Second ]
* 2026 interest rates remain the same for the first quarter [ #Third ]
* Recently issued disaster tax relief [ #Fourth ]
* Other tax news [ #Fifth ]
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* Additional guidance provided about tips or overtime received in tax year 2025*
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Treasury and the IRS are providing additional guidance for workers eligible to claim the deduction for tips and overtime compensation [ [link removed] ].
Notice 2025-69 [ [link removed] ] provides employees instructions for determining the amount of their deduction without a form like a W-2 or a 1099 their employer. It also provides transition relief for workers who receive tips in a specified service trade or business.
The guidance also includes examples of situations tip and overtime earners might experience.
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* Penalty relief guidance for reporting on tips and overtime under the One, Big, Beautiful Bill*
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Treasury and the IRS are providing guidance offering penalty relief to employers and other payors for tax year 2025 [ [link removed] ]. about new information reporting requirements for cash tips and qualified overtime compensation. This guidance could impact businesses with employees and individual clients who receive tips or overtime compensation.
Notice 2025-62 [ [link removed] ] provides penalty relief from the new information reporting requirements to employers and other payors for not filing correct information returns and not providing correct payee statements to employees and other payees.
Employers and other payors will not be penalized for failing to separately report amounts reasonably designated as cash tips or the occupation of the person receiving those tips. Additionally, they won’t be penalized for failing to separately report the total qualified overtime compensation.
This relief applies only to returns and statements filed for tax year 2025 and only if the filer submits a complete and accurate return or statement.
For more information, see the One, Big, Beautiful Bill provisions page [ [link removed] ] on IRS.gov.
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* 2026 interest rates remain the same for the first quarter*
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Interest rates [ [link removed] ] will remain the same for the for the first quarter of 2026 which begins Jan. 1, 2026.
For corporations, the underpayment rate is the federal short-term rate plus three percent. The overpayment rate is the federal short-term rate plus two percent.
These interest rates are computed from the federal short-term rate determined during Oct. 2025. For details see Revenue Ruling 2025-22 [ [link removed] ].
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* Recently issued disaster tax relief*
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The IRS’s Tax relief in disaster situations [ [link removed] ] page has the most recent tax relief provisions for taxpayers affected by a disaster. The most recent include:
* *Missouri* – Businesses and individuals in parts of Missouri [ [link removed] ] affected by severe storms, straight-line winds, tornadoes and flooding that began on March 30, 2025. Taxpayers now have until March 30, 2026, to file various federal individual and business tax returns and make tax payments.
* *Alaska* – Businesses and individuals in the Lower Kuskokwim Regional Educational Attendance Area, Lower Yukon Regional Educational Attendance Area and Northwest Arctic Borough [ [link removed] ] affected by severe storms, flooding and remnants of Typhoon Halong that began on Oct. 8, 2025, now have until May 1, 2026, to file various federal individual and business tax returns and make tax payments.
* *Sisseton Wahpeton Oyate of the Lake* – Businesses and individuals in the Sisseton-Wahpeton Oyate Tribal Nation [ [link removed] ] affected by severe storms and flooding that began on June 12, 2025, now have until Feb.2, 2026, to file various federal individual and business tax returns and make tax payments.
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* Other tax news*
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The following information may be of interest to individuals and groups in or related to small businesses:
* 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 [ [link removed] ]
* IRS revises and updates Form 1099-K frequently asked questions [ [link removed] ]
* Nationwide Tax Forum Online adds latest 2025 seminars and content [ [link removed] ]
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