The Internal Revenue Service (IRS) has recently issued a statement that provides clarity on certain tax provisions related to the One Big Beautiful Bill Act (OBBBA), a new piece of legislation passed earlier this year. For taxpayers and employers, one of the most important announcements is that there will be no changes to individual information returns or withholding tables for the tax year (TY) 2025. This means that taxpayers, payroll providers, and employers will continue to use the current forms, procedures, and withholding tables that they’ve been accustomed to for the 2025 tax filing season.
This announcement, made on August 7, 2025, signals a critical decision by the IRS to provide continuity in tax administration while it works on updating and implementing more complex provisions for the future. Let’s break down what this means for both individual taxpayers and business owners, and what we can expect in the future.
Key Points for Tax Year 2025 Regarding the OBBBA Provisions
No Changes to Forms or Withholding Tables for 2025
The IRS has confirmed that several forms, including Form W-2 (Wage and Tax Statement), existing Forms 1099(Information Returns), and Form 941 (Employer’s Quarterly Federal Tax Return), will remain unchanged for Tax Year 2025.
This means that businesses and employers will continue using the existing procedures to report wages, tips, and other compensation without the need for immediate adaptations or changes.W-2 Form: This form is primarily used by employers to report wages paid to employees and the taxes withheld from those wages.
Forms 1099: These forms are used to report other income payments made by businesses to non-employees. The common examples include Form 1099-MISC and Form 1099-NEC for independent contractors.
Form 941: Employers use this form to report federal income tax withholding, Social Security and Medicare taxes, and additional wages paid to employees.
The IRS decision to keep these forms the same for the 2025 tax year prevents businesses from scrambling to adopt new forms, ensuring that the tax filing season remains as smooth as possible for all parties involved.
No Updates to Federal Income Tax Withholding Tables
Alongside the continuation of the above forms, the federal income tax withholding tables will also remain the same for 2025. These tables are critical for employers as they determine how much federal income tax to withhold from employees’ paychecks based on the information they provide on their Form W-4.
By keeping these tables unchanged for the 2025 tax year, the IRS aims to avoid potential disruptions to payroll systems and ensure consistency in withholding procedures across businesses and taxpayers.Employers will need to continue using the existing withholding calculations for the 2025 year. These withholding tables were last updated in recent years, and since there are no immediate changes being made due to the OBBBA, this will provide the necessary stability for businesses and employees alike.
No Immediate Change in Reporting or Withholding Procedures
In addition to withholding tables, the IRS assures that employers and payroll providers should continue using their current procedures for reporting and withholding federal taxes. This includes practices for filing quarterly reports, paying taxes, and fulfilling other compliance obligations under the tax code.
These provisions are crucial for ensuring there is no confusion in processing payroll during the 2025 filing season. The IRS recognizes the complexity of transitioning to new tax systems, so they have chosen to postpone major changes to allow both the taxpayers and tax professionals ample time to prepare.
Why is This Happening?
The IRS’s decision to maintain the status quo for the 2025 tax year under the One Big Beautiful Bill Act is intended to avoid disruptions during the tax season. The phased implementation of this sweeping law is designed to give businesses, tax professionals, and payroll providers enough time to fully understand and implement its provisions.
The OBBBA includes significant changes in areas like tip reporting and overtime pay reporting that require new forms, instructions, and procedures. However, implementing these changes too quickly could lead to errors, delays, and confusion for both employers and taxpayers.
This approach also provides businesses and professionals with a grace period, allowing them to focus on the proper implementation of OBBBA-related changes in the following tax year without the additional burden of immediate updates.
What’s Next? Looking Ahead to Tax Year 2026
While 2025 will see no significant updates to withholding and reporting tables, the IRS is preparing for updates in the following year, specifically for Tax Year 2026. As the provisions of the One Big Beautiful Bill Act are phased in, the IRS is working diligently to create new guidance and updated forms that will be needed for these changes. Some of the major modifications expected in TY 2026 will include:
Updated Reporting on Tips and Overtime Pay
The IRS is working to address how businesses should report tips and overtime pay under the new provisions of the OBBBA. These updates will likely involve new forms or fields on existing forms to capture this information in more detailed ways. This will also impact how businesses calculate tax obligations related to tips and overtime.Implementation of New Tax Benefits
One of the key aspects of the OBBBA is the introduction of new tax benefits for individual taxpayers. The Treasury Department and the IRS will release additional guidance on how taxpayers can claim these benefits when they file their 2026 returns. This might include new procedures for filing, required documentation, and other technical details to ensure smooth tax filings.Coordination with Employers, Payroll Providers, and Tax Professionals
The IRS will be coordinating closely with all stakeholders—employers, payroll providers, and tax professionals—to ensure that the 2026 tax year begins without issues. This will include the rollout of educational resources, guidance, and timelines for implementing new forms and procedures related to OBBBA. Tax professionals and businesses will need to stay updated as the IRS issues new information.
Conclusion
The IRS’s decision to not change withholding tables or information return forms for TY 2025 under the One Big Beautiful Bill Act provides a much-needed stability for the tax year ahead. This decision prevents disruptions for employers, payroll professionals, and taxpayers, who would otherwise be faced with a complex and rushed implementation. Instead, the IRS is taking a cautious and methodical approach, ensuring that changes to tip reporting, overtime pay, and other aspects of the law will be rolled out effectively for Tax Year 2026.
While the immediate future may seem quiet, the IRS is actively working on updates that will affect how businesses report compensation and how taxpayers claim new benefits. For now, businesses and tax professionals should continue following the current procedures for reporting and withholding, ensuring a smooth tax season for all. Keep an eye on IRS announcements for more detailed updates on changes coming in 2026.
