On Thursday, July 3, the U.S. House of Representatives passed House Resolution 1, commonly referred to as the One Big Beautiful Bill Act [H.R. 1]. The vote came just two days after the Senate narrowly passed the legislation. President Trump is expected to sign the legislation soon.
Payroll-Related Provisions
There are several provisions in H.R. 1 that will affect payroll operations. Here are several from Title VII, Subtitle A, regarding taxes:
- Permanent extension of the Tax Cuts and Jobs Act (Chapter 1).
- No tax on tips (Chapter 2, §70201). The legislation provides eligible individuals a deduction “of an amount equal to the qualified tips received during the taxable year.” The deduction is retroactive to January 1, 2025, and expires on December 31, 2028.
- No tax on overtime (Chapter 2, § 70202). The legislation establishes a deduction, subject to certain limitations, equal to the “qualified overtime compensation received during the taxable year.” The legislation also includes a requirement to report overtime compensation on Form W-2, Wage and Tax Statement. This provision is retroactive to January 1, 2025, and expires on December 31, 2028.
- Increase in Form 1099-MISC and Form 1099-NEC reporting threshold from $600 to $2,000 (Chapter 4, Subchapter D, §70433). This provision is effective beginning with payments made in 2026. The threshold is also subject to inflation adjustments beginning in 2027.
For in-depth coverage of H.R. 1, see Issue 7 of Payroll Currently, which has a publication date of July 11.
To learn how this will affect your year-end processing and to prepare for changes in 2026, plan to attend one of PayrollOrg’s Preparing for Year-End programs this fall!
Curtis E. Tatum, Esq., is In-House Counsel and Senior Director of Federal Payroll Resources for PayrollOrg.
