The Internal Revenue Service (IRS) has confirmed that there will be no adjustments to withholding tables or Form W-2 in 2025, despite the passage of the recent tax legislation.
Headline: IRS Announces No Changes to Withholding Tables for 2025 as Part of OBBBA Implementation
The Internal Revenue Service (IRS) has revealed that there will be no changes to withholding tables for the 2025 tax year as part of the implementation of the One Big Beautiful Bill Act (OBBBA). This decision aims to maintain stability during the 2025 tax filing season while preparing for more significant changes in 2026 and beyond.
Details
Employers and payroll providers have been instructed to continue using current procedures for reporting and withholding. Forms W-2, 1099s, Form 941, and other payroll forms will remain unchanged, and federal income tax withholding tables will not be updated for 2025. This approach is part of a phased implementation strategy designed to prevent disruptions and provide ample time for the IRS, businesses, and tax professionals to prepare.
Under the OBBBA, seniors who are age 65 and older will be eligible to claim a new, temporary deduction of $6,000 beginning in 2025. To claim this deduction, you must include your Social Security Number on the return and file jointly if married. Workers who receive overtime will be eligible for a deduction for qualified overtime pay of $12,500 ($25,000 for married taxpayers filing jointly) for the tax years 2025 through 2028. However, the IRS has not yet provided guidance on how overtime income will be reported for purposes of claiming the deduction.
The IRS is actively developing new guidance and updated forms for the 2026 tax year, aiming for a smoother transition to OBBBA provisions. The IRS plans to provide further details and instructions in the coming months about how taxpayers can claim OBBBA-related tax benefits when filing 2025 returns.
If you make changes to your withholding, the change could take about a month to kick in. An exception to the 30-day rule applies if an employee submits a Form W-4 claiming exempt status by February 15 to be effective for the year. If you don't want to make changes to your withholding, you can continue at your current level.
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[1] IRS News Release: IRS Announces No Changes to Withholding Tables for 2025 [2] OBBBA Implementation Plan: Phased Approach for 2025 Tax Year [3] OBBBA Provisions: Senior Deduction and Overtime Deduction Details [4] IRS Guidance: OBBBA-Related Tax Benefits for 2025 Tax Returns [5] IRS Instructions: Continue Using Current Procedures for 2025 Reporting and Withholding
- The One Big Beautiful Bill Act (OBBBA), with its new tax deduction for seniors and the overtime pay deduction, is set to introduce significant changes to the finance landscape of businesses and individuals, starting from 2026.
- In the business world, most forms such as W-2, 1099s, Form 941, and payroll forms will remain the same for the 2025 tax year, following the Internal Revenue Service's (IRS) announcement of no changes to withholding tables and a phased implementation strategy to prevent disruptions.
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