Information Reporting Requirements Under The One Big Beautiful Bill

On July 4, 2025, President Trump signed the One Big Beautiful Bill into law. The legislation makes far-reaching changes to the federal tax code and other parts of the government. The bill cuts certain taxes, changes funding for a number of federal programs, raises the debt ceiling by $5 trillion, and extends many of the provisions originally introduced in the 2017 Tax Cuts and Jobs Act (TCJA).

Information Reporting Requirements

The IRS requires businesses to file W-2s for their employees and various 1099 series forms. In addition, businesses receive 1099s from other businesses. The One Big Beautiful Bill has several provisions that make changes to the information reporting requirements.

1099 Threshold

The bill increases the 1099 reporting threshold for most payments from $600 to $2,000 beginning with 2026 payments. This new $2,000 limit is indexed for inflation.

1099-K Threshold

The bill increases the reporting threshold for filing the 1099-K. Beginning in 2025 third party settlement organizations are only required to issue forms when a recipient has over 200 transactions totaling at least $20,000.

Reporting for Tip Income Deduction

Beginning in 2025, individuals receive deductions for qualified tip income and for qualified overtime pay as long as their income is below certain thresholds. These new deductions require changes to information reporting requirements. Tip income is only eligible for the deduction if the tip is paid voluntarily and without any consequence for nonpayment. Tips meeting these requirements will need to be separated from tip that are required and the breakout will need to be reported. The tip reporting will be on Form W-2 for employees and Form 1099 for non-employees. Businesses will need to work with their payroll companies and their 1099 software companies to determine how to track and report these calculations.

Reporting for Qualified Overtime Pay

Qualified overtime pay is also eligible for an individual deduction if the individual’s income is below certain limits. Qualified overtime pay is only the excess of payments over the normal pay rate that are required under Section 7 of the Fair Labor Standards Act of 1938. That means that the employee’s base pay rate for the overtime work is not eligible for the credit. Also, the effects of any state overtime requirements in excess of the federal requirements are not included in qualified overtime pay. Businesses will need to work with their payroll companies to determine how to track and report the qualified overtime pay in their payroll system.

Steps Businesses Should Take

• Businesses should contact their payroll provider for guidance on how to track the qualified tip income and the qualified overtime income in their payroll system so that it can be reported properly at year-end. Payroll companies might need to update their software for proper tracking.
• Businesses who will need tip reporting on 1099s also need to contact their 1099 provider to determine how to track the tip information that will need to be reported on the 1099s.
• Employers should also educate their employees about how these requirements operate. Most employees will likely expect that tip income eligible for the credit includes all tip income. Similarly, most employees will likely expect that their overtime pay eligible for the deduction will be the total amount that they are paid for working overtime. Employers who do not explain the reporting to employees before information returns are due are likely to have employees upset that they are not receiving the tax benefits that they expected.

Contact Us 

With major changes to tax rules, both individuals and business owners are encouraged to revisit tax strategies. A proactive approach will be essential to capture benefits, manage risk, and stay compliant as the new provisions take effect. If you have questions about the information outlined above, or need assistance with another tax issue, WhippleWood CPAs can help. For additional information call 303-989-7600 or click here to contact us. We look forward to speaking with you soon.