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Notice 2025-62: Penalty relief related to information reporting requirements for deductions for qualified tips and overtime

Relief for tax year 2025

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November 10, 2025

The IRS on November 5, 2025, released Notice 2025-62, providing penalty relief to employers and other payors for tax year 2025 related to the new information reporting requirements for deductions for qualified tips and qualified overtime compensation, as enacted under Pub. L. No. 119-21 (known as the “One Big Beautiful Bill Act” (OBBBA)).

Specifically, Notice 2025-62 provides relief for tax year 2025 from the penalty under section 6721 for failure to file correct information returns and the penalty under section 6722 for failure to furnish correct payee statements.

As explained in the related IRS release—IR-2025-110 (November 5, 2025)— employers and other payors will not face penalties for failing to provide a separate accounting of any amounts reasonably designated as cash tips or the occupation of the person receiving such tips. In addition, employers and other payors will not face penalties for failing to separately provide the total amount of qualified overtime compensation. The relief is limited to returns and statements filed and provided for tax year 2025 and applies only to the extent that the person required to make the return or statement otherwise files and provides a complete and correct return or statement.

Notice 2024-62 states that additional guidance for individual taxpayers that addresses how they can claim the deductions for qualified tips and qualified overtime compensation when they file their tax year 2025 returns is forthcoming.

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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. KPMG LLP does not provide legal services.

The information contained herein is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

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