The new "no tax on tips" and "no tax on overtime" deductions let
eligible workers deduct up to $25,000 in qualified tips and $12,500 in
overtime premium pay (2025–2028). For employers, here's the part
that's easy to miss: 2025 was a grace period, but beginning with 2026,
you must separately report qualified tips and overtime on Forms W-2.
Restaurants, salons, and hospitality businesses especially should
confirm their payroll system can isolate and track this data now.
Getting it wrong once the grace period ends can mean per-form
penalties.
Get Payroll-Ready for 2026
Restaurant, salon, or hospitality owner? Highline helps DMV
service businesses get tip and overtime reporting right
before the new rules take effect.