The One Big Beautiful Bill Act, passed on July 4, 2025, introduced a critical payroll change for the 2025 tax year. Notably, federal withholding no longer applies to overtime wages. Because of this, employers are now required to separately report overtime and double-time premium amounts to employees. This should be done either on the 2025 W-2 (such as Box 14) or by providing a separate written statement.
This requirement applies only to the 2025 reporting year, and the IRS may revise these rules for 2026 and beyond.
Sage has prepared purpose-built Sage 300 CRE reports and formulas that help calculate and validate overtime and double-time premium amounts. These can be found and downloaded using the following link:
Our team can assist you with installing, configuring, and customizing these reports. So you can match your company’s Pay IDs, rates, and payroll policies. Contact us at support@ethosystems.com for more information.
Key reminders:
- Overtime is typically paid at 1.5x the regular rate for hours worked over 40 in a workweek (per FLSA).
- The FLSA does not require double-time pay, but if used, only the premium portion is reportable.
- IRS Notice 2025-62 provides transition penalty relief for the 2025 tax year.
If your system uses different pay codes or calculation factors, ETHOSystems can help modify the reports and W-2 formulas to ensure accurate reporting.
Contact ETHOSystems today for hands-on assistance with reports, formulas, and year-end payroll readiness at support@ethosystems.com
