IRS Releases Fact Sheets on Electronic Payments and Overtime Deduction
- HFM CPAs + Business Advisors
- Feb 19
- 2 min read
The IRS has released two new fact sheets addressing significant changes for taxpayers: the transition to fully electronic federal payments and a new deduction for qualified overtime compensation. Here's what you need to know:
Electronic Payments: The End of Paper Checks
The U.S. Treasury and IRS are transitioning to fully electronic federal payments under Executive Order 14247. Starting September 30, 2025, the IRS began phasing out paper refund checks, with most taxpayers receiving refunds via direct deposit. The IRS is also encouraging electronic payment options for taxes owed, though paper payments will still be accepted for now with limited exceptions over time.
What to do: Ensure your direct deposit information is current and explore electronic payment options at IRS.gov/payments.
Read the full IRS guidance: Questions and answers about Executive Order 14247: Modernizing Payments To and From America's Bank Account
New Deduction for Qualified Overtime Compensation
The One, Big, Beautiful Bill Act (OBBBA) introduced a new deduction for qualified overtime compensation under the Fair Labor Standards Act (FLSA). Generally speaking, eligible taxpayers can deduct up to $12,500 ($25,000 for joint filers) of qualified overtime pay, with phase-outs for higher incomes. For tax year 2025, employers are not required to separately report overtime compensation, but taxpayers can calculate the deduction using IRS guidance.
What to do: Review your pay stubs and consult the IRS guidance or a tax professional to determine your eligibility and calculate your deduction.
Read the full IRS guidance: Questions and answers about the new deduction for qualified overtime compensation
Have Questions?
HFM CPAs is committed to keeping you informed about important tax law changes and helping you navigate the complexities of tax compliance with confidence. If you have questions about how these updates affect your tax situation, contact HFM CPAs for personalized guidance.
HFM CPAs provides specialized accounting, tax, and assurance services to individuals and businesses across Connecticut and Rhode Island.
