Association Events
Learn about NHADA's major events and fundraisers.
Print this article
.png?width=150&name=Ally_Final%20Logos%20and%20Pairings_11.14.2018-01%20(2).png)
-2.png?width=150&name=Wipfli%20Logo%20Blue%20RGB%20(1)-2.png)
.jpg?width=150&name=NHADA_Partner_FTR_Img_NHADA_Insurance%20(1).jpg)
.jpg?width=150&name=NHADA_Partner_FTR_Img_JMA(1).jpg)
.png?width=150&name=corp_logo_horz_on_light_with_trademark_symbol_1200w%20(002).png){kind=logo}
For tax years 2025 through 2028, individuals who receive qualified overtime compensation under the Fair Labor Standards Act (FLSA) may deduct the amount that exceeds their regular rate of pay (generally, the “half” portion of “time-and-a-half” compensation) and is reported on a Form W-2 or Form 1099.
The Fact Sheet explains:
- the definition of qualified overtime compensation for tax deduction purposes;
- how to determine whether an employee is FLSA overtime-eligible;
- the deduction amount(s) and limits to the deduction;
- additional rules that apply to the deduction;
- whether employers are required to separately report qualified overtime compensation, depending on the tax year; and
- where to find additional guidance regarding the tax deduction, the FLSA, and overtime pay in general.
Regarding employers’ obligations for tax year 2025, the Fact Sheet explains that employers are not required to report qualified overtime compensation separately on Forms W-2, 1099-NEC, and 1099-MISC. For tax years 2026 and later, employers are required to separately report qualified overtime compensation. Forms W-2, 1099-NEC, and 1099-MISC will be updated to allow employers to provide separate reporting of an individual’s qualified overtime compensation.
The IRS previously issued Notice 2025-62 providing penalty relief to employers and other payers for tax year 2025 regarding new information reporting requirements for qualified overtime compensation.
NADA remains in close contact with the Department of the Treasury and the IRS to raise key questions and issues dealers face. Any additional guidance from the agencies will be shared as more information becomes available.