To help individuals better understand the new deductions for qualified overtime compensation under the One Big Beautiful Bill Act (OBBBA), the U.S. Department of the Treasury (Treasury) and the IRS issued frequently asked questions (FAQs) on Jan. 23, 2026.
On July 4, 2025, President Donald Trump signed a tax and spending bill commonly referred to as the OBBBA into law. Among other provisions, the OBBBA allows certain workers an above-the-line deduction for “qualified tips” and “qualified overtime compensation” for taxable years beginning after Dec. 31, 2024, and ending for taxable years beginning after Dec. 31, 2028.
The FAQs, issued in Fact Sheet 2026-01, contain additional information about the deduction, provide resources for employees to assist them in determining whether they receive qualified overtime compensation under the Fair Labor Standards Act (FLSA), and contain helpful information regarding the differences in reporting requirements for tax years 2025 and 2026 through 2028.
Click the following link to read the Treasury and IRS’s FAQs.