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IRS Newswire




January 23, 2026





Issue Number:    IR-2026-10

Inside This Issue
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*Treasury, IRS** issue FAQs to address the new deduction for qualified overtime compensation under the One, Big, Beautiful Bill*

IR-2026-10, Jan. 23, 2026

WASHINGTON – The Department of the Treasury and the Internal Revenue Service today issued frequently asked questions in Fact Sheet 2026-01 [ [link removed] ] related to the new deduction for qualified overtime compensation under the One, Big, Beautiful Bill.

For tax years 2025 through 2028, individuals who receive qualified overtime compensation may deduct the amount that exceeds their regular rate of pay (generally, the “half” portion of “time-and-a-half” compensation) and is reported on a Form W-2 or Form 1099.

These FAQs contain additional information about the deduction, provide resources for employees (including federal employees) to assist them in determining whether they received qualified overtime compensation under the Fair Labor Standards Act, and contain useful information regarding the differences in reporting requirements for tax year 2025 and 2026-2028.

Treasury and IRS previously issued Notice 2025-62 [ [link removed] ] providing penalty relief [ [link removed] ] to employers and other payers for tax year 2025 regarding new information reporting requirements for qualified overtime compensation; and issued Notice 2025-69 [ [link removed] ] for workers eligible to claim the deduction [ [link removed] ] for overtime compensation for tax year 2025. 

For more information, see One, Big, Beautiful Bill Provisions [ [link removed] ] on IRS.gov.

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