IRS Publication 15 Provides Recap of OBBBA Tax Provisions

The IRS summarized several tax provisions of the One Big Beautiful Bill Act (OBBBA) in the 2026 version of Publication 15.

Publication 15 is called the Employer’s Tax Guide — or sometimes, Circular E.

Of special interest to Payroll pros, the IRS provided info in the publication on withholding from qualified tips and qualified overtime compensation.

Under the OBBBA, employees can deduct up to $25,000 of qualified tips on their federal income tax returns through tax year 2028.

The OBBBA also allows employees to take a federal tax deduction for qualified overtime compensation. That’s capped at $12,500 ($25,000 if married filing jointly) and is available through tax year 2028.

The IRS noted that some employees may want to receive more money throughout the year in their paychecks instead of waiting to file their returns at tax time.

Therefore, the publication stressed that employers must use:

• An employee’s updated Form W-4, Employee’s Withholding Certificate, if one is submitted, and
• The withholding procedures found in Publication 15-T, Federal Income Tax Withholding Methods.

IRS Explains Other Changes

The OBBBA also permanently extended the individual tax rates set in 2017 in the Tax Cuts and Jobs Act.

Publication 15 summarized what’s staying the same: the individual income tax rates, 22% withholding rate on supplemental wages and 24% backup withholding rate.

Other OBBBA changes highlighted in the 2026 tax guide?

The Form 1099-MISC payment threshold has gone from $600 to $2,000 for certain recipients.

Similarly, the Form W-2 wage reporting threshold has been raised from $600 to $2,000 if no federal tax was withheld.

Excludable Amount of Trump Accounts

Lastly, the guide summed up Trump accounts – i.e., individual retirement accounts for children under the age of 18.

Of the $5,000 annual contribution limit, employers may contribute up to $2,500 for an employee or that person’s dependent. The amount is excludable from the employee’s gross income.