One Big Beautiful Bill Act: Employment Changes
The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, introduces capped tax deductions on tips (up to $25,000 annually for cash and reported tips in specified occupations) and overtime pay premiums (capped at $12,500 for individuals or $25,000 for joint filers with income limits), while Swipeclock supports employer compliance by providing a specialized report that tracks FLSA overtime hours and eligible premiums based on a federal 40-hour workweek standard.
The recent passage of the One Big Beautiful Bill Act (OBBBA) has had a significant impact on employers. Some of the provisions relate to tax on specific types of income, including tips and overtime. Explore the law and how it may impact your clients, as well as how Swipeclock can support compliance with the changes.
One Big Beautiful Bill Act: An Overview
H.R.1 was signed into law in July of 2025. Also referred to as the “One Big Beautiful Bill Act” or OBBBA, this piece of legislation made significant changes to federal taxes, deductions, and credits.
Tipped employees now face fewer tax requirements on a portion of their income. The deduction for tips is capped at $25,000 per year, and only cash tips and tips reported to employers qualify. The IRS published a list of occupations that customarily receive tips, so the provision applies to those working in these roles.
Additionally, taxes are reduced on overtime pay. The deduction has a cap of $12,500 (for individuals) / $25,000 (filing jointly). It is limited to the premium portion of OT pay, or the additional amount exceeding the regular hourly rate as required under the FLSA. If a person’s MAGI exceeds $150,000 (or $300,000 for couples filing jointly), the deduction is lower.
How Swipeclock Supports the Requirements
To support employers managing the requirements associated with OBBBA, specifically the no tax on overtime provision, a new purpose-built report was released in early January of 2026. This report in Swipeclock products summarizes FLSA overtime hours and eligible overtime premiums. It is designed to provide documentation and supporting detail for employers in calculating these numbers for employees.
This report applies a federal 40-hour per week standard. It evaluates overtime-eligible punch categories, ignoring site-specific OT rules and alternative thresholds.
The provision around no tax on overtime applies to tax years 2025, 2026, 2027, and 2028. The deduction applies only to non-exempt employees who meet the classification standards under the FLSA. It covers the statutorily required OT premium for hours accrued over 40 in a week.
Some deduction caps and phase-outs exist, which are not handled in this specific report.
The report can be exported to CSV format. It can include employee names and codes, overtime hours worked, overtime pay rates, date range, and the name of the company.
It’s important to note that the software tracks hours worked through its timekeeping module. All wages paid and W-2 totals remain within the payroll system, and employers must verify totals before moving forward.
Managing the regulations under this legislation is easier with Swipeclock. If you’re not already partnered with us, now is the time. Offer your clients what they need to handle these changes and get the data needed. Explore our partnership options to find the level that works for you.
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