The One Big Beautiful Bill Act (OBBBA) introduced significant updates for businesses and payroll management companies. These changes—particularly around information return and payroll tax reporting—will take effect in 2026, but proactive employers should begin preparing in 2025.
At CD Bradshaw & Associates, P.C., we believe in helping clients plan with clarity and confidence, not panic. Here’s what to know — and how to get ready with intention.
1. New Reporting Thresholds Begin in 2026
Businesses must report payments that meet or exceed certain thresholds for rents, wages, and other compensation. Currently, that threshold sits at $600. Under the OBBBA, for payments made after 2025, it will increase to $2,000, with future inflation adjustments beginning in 2027.
This change affects common forms such as W-2, 1099-MISC, and 1099-NEC, and will require updates to your vendor payment and payroll systems.
At CD Bradshaw, our advisory team encourages clients to treat this as an opportunity to review their payment processes, documentation practices, and reporting systems to ensure accuracy and compliance well ahead of 2026.
2. Reporting Qualified Tip and Overtime Income
Between 2025 and 2028, employees who receive qualified tip income and qualified overtime income can take advantage of new federal income tax deductions.
However, because these are deductions, not exclusions, both federal payroll taxes and withholding rules still apply. State and local taxes may continue to tax this income as well.
While the IRS confirmed no changes to 2025 federal forms such as W-2s or 941s, employers should start tracking qualified tip and overtime income immediately — even retroactively from January 1, 2025. The IRS will provide transition relief for 2025, but maintaining good data now will make your compliance process smoother later.
As your financial partners, we recommend setting up internal systems now so your team can confidently report these new items once formal changes take effect.
3. Eligible Tip-Receiving Occupations
In September, the IRS proposed regulations identifying eight categories of tip-receiving occupations eligible for the OBBBA deduction, including:
- Food and beverage services
- Entertainment and events
- Hospitality and guest services
- Home and personal services
- Personal appearance and wellness
- Recreation and instruction
- Transportation and delivery
Each occupation category includes new three-digit reporting codes, which will soon appear on information returns. Businesses in these industries should update payroll software and prepare to capture occupation data accurately beginning in 2025. If you need help with this, our advisory team is happy to help with these accounting methods.
4. Preview of the 2026 Form W-2
The draft 2026 Form W-2 introduces new codes and fields to support OBBBA reporting:
- Code TA – Employer contributions to Trump Accounts
- Code TP – Employee’s qualified cash tip income
- Code TT – Employee’s qualified overtime income
- Box 14b – Employee occupation for qualified tip earners
These updates highlight the IRS’s emphasis on transparency and accurate classification, areas where CD Bradshaw consistently guides employers toward clarity and compliance.
5. Stay Informed — and Intentional
The OBBBA brings sweeping changes that will reshape employer reporting in the years ahead. As regulations evolve, staying proactive rather than reactive is key to minimizing risk and maximizing efficiency.
At CD Bradshaw & Associates, we choose to do more than compliance. Our Business Advisory Services help you:
- Build efficient, compliant payroll and reporting systems
- Implement forward-looking cash flow and compensation strategies
- Coach internal teams for long-term independence and confidence
Let’s Prepare Together
As your Empowering Financial Partner, CD Bradshaw & Associates helps business owners across Texas stay informed, compliant, and confident in their financial decisions.
Let’s build a plan tailored to your payroll and reporting needs before 2026 tax season arrive.
Schedule a Business Advisory Consultation today and turn compliance into a strategic advantage by calling us or filling out this Questionnaire.
Contact CD Bradshaw & Associates, P.C.
512-930-4090
Building authentic relationships. Guiding with clarity. Empowering sustainable success.
By CD Bradshaw & Associates, P.C. — The Empowering Financial Partners
