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One Big Beautiful Bill Act (OBBBA) Updates for 2025

This article explains how Fuse will handle FLSA overtime and Tip reporting on 2025 Forms W-2 under the One Big Beautiful Bill Act (OBBBA)

Quick refresher: What changed (and what didn’t)

What changed

The OBBBA, signed into law on July 5, 2025, allows employees to deduct from their federal taxable income when filing their personal tax returns:

  • Certain tip income, and

  • The premium portion of FLSA overtime wages

What didn’t change

  • There is no impact on payroll calculations

  • Tips and overtime are still taxed and withheld the same way they are today

  • This is W-2 reporting only, not a paycheck change

How Fuse will handle 2025 FLSA overtime reporting

  • For the 2025 tax year, Fuse will populate Form W-2, Box 14, with the FLSA overtime premium portion of wages.
  • Fuse has automatically enabled this reporting for all clients to ensure compliance and consistency with the new requirements.
  • If you do not want FLSA overtime reported in Box 14 for 2025, please notify Fuse so we can opt you out.

 

Overtime (Form W-2, Box 14)

  • A new line item labeled “FLSA OT” will appear in Box 14

  • This reflects only the premium portion of overtime covered by the Fair Labor Standards Act

  • Fuse will automatically pull qualifying overtime paid during 2025 using the following standard earning types:

    • Alabama Overtime

    • Average Overtime (0.5)

    • Overtime

    • Overtime (Premium)

  • Special or custom overtime configurations cannot be supported for 2025

Calculation logic used by Fuse

  • Multiplier 0.5 → 100% of earnings reported

  • Multiplier 1.5 → Earnings × 0.33334 reported

  • Multiplier 2.0 → Earnings × 0.25 reported

All calculated amounts are summed and reported as a single “FLSA OT” line in Box 14.

We have already enabled this feature for all companies, and Fuse will recalculate 2025 W-2s to ensure all qualifying overtime is captured accurately.

What you need to do

  • Nothing, unless you prefer to opt out of FLSA overtime reporting in Box 14 for 2025

  • If you wish to opt out, please contact Fuse directly at support@fuseworkforce.com

 

Tips (Form W-2, Box 7)

Based on updated IRS guidance released on November 21, 2025, tips may be reported in Box 7 of the W-2.

  • This is reporting only

  • There is no change to how tips are taxed or withheld during payroll

 

What’s next

  • Fuse will complete the W-2 recalculation needed to support this reporting

  • We’ll continue to support year-end processing and answer questions as they come up

  • More information is coming for 2026, including improvements to overtime tracking, configuration flexibility, and long-term reporting enhancements

As always, this is general information and not tax advice. Employees will determine how these amounts are handled on their individual tax returns.