The IRS has released FS-2025-03, which provides an overview of the eligibility requirements for the new personal exemption deduction for seniors and the following new deductions that were enacted by the One Big, Beautiful Bill Act (OBBBA):
- “No tax on tips;”
- “No tax on overtime;” and
- “No tax on car loan interest.”
The fact sheet summarizes the basic eligibility requirements for claiming these new deductions and also clarifies that for purposes of:
- All of the new deductions, other than the personal exemption deduction, the IRS will provide transitional relief for tax year 2025 for taxpayers claiming the deductions and for employers and other payors subject to the new reporting requirements, but the Fact Sheet does not specifically outline what the relief will entail; and
- The “no tax on overtime” deduction, the amount that qualifies for the deduction is only the pay that exceeds a taxpayer’s regular rate of pay, such as the “half” portion of “time-and-a-half” compensation, that is required by the Fair Labor Standards Act.
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