e-News for Small Business Issue 2025-19

On Sept. 30, 2025, the IRS will begin phasing out paper tax refund checks for most individual taxpayers. This marks the first step of the broader transition to electronic payments.

Taxpayers should continue filing taxes as usual, but if they don’t already receive refunds electronically, they should provide or secure suitable banking or digital payment options. This change will help reduce the risks of lost or stolen checks, speed up access to refunds, and lower costs to the IRS.

IRS seeks public input on guidance for workers who receive tips

Treasury and the IRS recently issued guidance defining which jobs may customarily and regularly receive tips under the One Big, Beautiful Bill. The proposed guidance list nearly 70 jobs from bartenders to water-taxi operators that qualify for no tax on tips.

The IRS is seeking public comments on these proposed regulations by Oct. 23, 2025. Complete instructions on submitting comments can be found in the proposed regulations.

To claim the tip deduction workers must get qualified tips. This means tips must be voluntary, paid in cash or an equivalent and not automatically included charges customers can’t opt out of such as auto-gratuity.

Tax relief for Wisconsin disaster victims

Businesses and individuals in parts of Wisconsin affected by severe storms, floods and landslides that began on Aug. 9, 2025, may be eligible for tax relief.

These taxpayers now have until Feb. 2, 2026, to file federal individual and business tax returns and make payments.

Tax relief extended to farmers and ranchers affected by drought in 49 states, other regions

Tax relief for farmers and ranchers in states and regions who sold or exchanged livestock because of drought conditions can qualify for tax relief. They can take more time to replace their livestock and defer tax on any gains from the forced sales or exchanges.

The IRS provides this extension to eligible farmers and ranchers if the applicable region is listed as suffering exceptional, extreme or severe drought conditions during any week between Sept. 1, 2024, and Aug. 31, 2025. This determination is made by the National Drought Mitigation Center.

More information on reporting drought sales and other farm-related tax issues is available in Publication 225, Farmer’s Tax Guide.

Final regulations on new Roth catch-up rule

Treasury and the IRS recently issued final regulations addressing several SECURE 2.0 Act provisions relating to catch-up contributions. These are additional contributions under a 401(k) or similar workplace retirement plan for employees who are age 50 or older.

The final regulations provide guidance for plan administrators to implement and comply with the new Roth catch-up rule. They also provide guidance relating to increased catch-up contribution limits under the SECURE 2.0 Act for certain retirement plan participants, particularly employees between the ages of 60-63 and employees in newly established SIMPLE plans.

These regulations generally apply to contributions after Dec. 31, 2026.

Other tax news

The following information may be of interest to individuals and groups in or related to small businesses:

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