The Internal Revenue Service (IRS) recently issued a significant announcement, IR-2025-82, on August 7, 2025, detailing its phased implementation strategy for the One Big Beautiful Bill Act (OBBBA). This news release provides crucial clarity for tax professionals regarding individual information returns and federal income tax withholding for Tax Year (TY) 2025, while also offering a glimpse into forthcoming changes for TY 2026.

No Changes to Forms or Withholding for Tax Year 2025

A primary takeaway from the IRS announcement is the decision to maintain the status quo for certain information returns and withholding tables for Tax Year 2025. Specifically, the IRS has stated that Form W-2, existing Forms 1099, and Form 941, along with other payroll return forms, will remain unchanged for TY 2025. Furthermore, federal income tax withholding tables will not be updated for OBBBA provisions for TY 2025.

This strategic decision by the IRS aims to prevent disruptions during the upcoming tax filing season. It is also intended to provide ample time for the IRS itself, along with businesses and tax professionals, to effectively implement future changes necessitated by the new law. The announcement underscores the commitment to a measured transition, allowing stakeholders sufficient preparation time.

Operational Guidance for Employers and Payroll Providers for TY 2025

Given the decision to defer changes, employers and payroll providers are instructed to continue utilizing their current procedures for both reporting and withholding for Tax Year 2025. This continuity is a key aspect of avoiding immediate operational complexities for businesses. The IRS website offers resources for employers, including information on filing and paying taxes, and popular forms like Form W-4 (Employee’s Withholding Certificate) and Form 941 (Employer’s Quarterly Federal Tax Return), which remain relevant.

Anticipating Changes for Tax Year 2026

While TY 2025 sees no immediate impact, the IRS is actively preparing for subsequent tax years. The agency is currently developing new guidance and updated forms specifically for Tax Year 2026. These forthcoming updates are expected to include changes to how tips and overtime pay are reported. The IRS has indicated its intent to collaborate closely with employers, payroll providers, and tax professionals to ensure a seamless transition for these anticipated modifications.

Claiming OBBBA-Related Tax Benefits

For individual taxpayers, the IRS plans to release additional information in the coming months regarding how they can claim OBBBA-related tax benefits when filing their returns. Both the Treasury Department and the IRS are in the process of preparing further guidance that will be relevant for reporting entities and individual taxpayers alike. Resources for individuals are available on the IRS website, covering areas like credits and deductions, including the Child Tax Credit and Clean Energy and Vehicle Credits. Information on how to file and popular forms such as Form 1040 are also readily accessible.

In conclusion, the IRS’s approach to the One Big Beautiful Bill Act for TY 2025 emphasizes stability and continuity for employers and payroll providers, while signaling forthcoming, but well-communicated, changes for TY 2026. Tax professionals should remain attentive to future IRS guidance as it will provide the necessary details for implementing OBBBA provisions in subsequent tax years.

Prepared with assistance from NotebookLM.