H.R.1, commonly referred to as the “One Big Beautiful Bill,” was signed into law on July 4. The law has several provisions that will impact payroll operations, employee benefits, and tax reporting obligations. Key provisions employers should be aware of are summarized below.

We recommend employers take the following actions to ensure compliance with the law and consider whether changes to employee benefits are needed:

• Update payroll systems – The IRS announced that there will be no changes to information return forms or withholding tables for Tax Year 2025. According to the notice, “employers and payroll providers should continue using current reporting procedures for reporting and withholding.” The IRS will provide new guidance and updated forms for 2026, including changes to how tips and overtime pay are reported. Transitional relief will be provided for Tax Year 2025 for employers subject to the new reporting requirements regarding tips and overtime pay.
• Review benefit offerings – Evaluate dependent care, student loan repayment, and child care programs. Coordinate with benefit providers to ensure compliance with new limits and credits.
• Communicate with employees – Inform employees about new deductions (e.g., tips and overtime) and benefit changes. Update onboarding and open enrollment materials accordingly.
• Coordinate with tax advisors – Confirm eligibility for credits (e.g., paid leave, child care). Review documentation and compliance for previous ERC claims and executive compensation rules.
• Monitor IRS guidance – Stay alert for IRS implementation guidance and clarifications. Be cognizant of effective dates for payroll-related provisions.

We are committed to helping you understand these changes and ensure your payroll operations remain compliant and efficient. Please contact us with any questions or to schedule a consultation.

The bill contains many other tax-related provisions that may impact you or your business. We will continue to study the details contained in the legislation. Should you have specific questions, please reach out to your JTaylor tax advisor.