No Tax on Tips & Overtime Explained: What Business Owners Actually Need to Know

Think no tax on tips and overtime means taxes disappear from your employees’ paychecks? Think again. Host Gene Marks sits down with Paychex Senior Federal Compliance Analyst Andy Gargana to unpack the truth behind these widely misunderstood provisions from the One, Big, Beautiful Bill. Discover why employees are still seeing taxes deducted, how the deductions actually work, critical income limits to know, and what reporting headaches may await you. Whether you’re managing a business or earning tips yourself, this conversation will save you from costly mistakes and angry phone calls.

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Topics include:
00:00 – Episode preview and guest introduction
01:52 – What no tax on tips and overtime is and how it works
04:01 – Overtime deduction explained
06:12 – What happens when employees file 2025 taxes?
07:22 – Changes expected in 2026 and beyond
08:34 – How should employers report no tax on tips and overtime?
10:23 – Biggest misperception: “Why am I still paying tax?”
11:16 – Limits and phaseouts
13:18 – What can payroll providers and HR teams do?
15:05 – Why employees must still verify their numbers
16:08 – 2026 and beyond: More structure, then expiration
18:03 – Avoiding IRS red flags
20:10 – Wrap up and thank you

DISCLAIMER:
The information presented in this podcast, and that is further provided by the presenter, should not be considered legal or accounting advice, and should not substitute for legal, accounting, or other professional advice in which the facts and circumstances may warrant. We encourage you to consult legal counsel as it pertains to your own unique situation(s) and/or with any specific legal questions you may have.