What’s New

Social security and Medicare taxes for 2025. The social security tax rate is 6.2% each for the employee and employer. The social security wage base limit is $176,100.

The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2024. There is no wage base limit for Medicare tax.

Social security and Medicare taxes apply to the wages of household workers you pay $2,800 or more in cash wages in 2025. Social security and Medicare taxes apply to election workers who are paid $2,400 or more in cash or an equivalent form of compensation in 2025.

Direct deposit of Form 944 refund is now available. Executive Order (EO) 14247 , Modernizing Payments To and From America’s Bank Account, issued on March 25, 2025, promotes operational efficiency by mandating the transition to electronic payments for all federal disbursements. Accordingly, the IRS will now issue Form 944 tax refunds by direct deposit. Direct deposit is a fast, simple, safe, and secure way to have your refund deposited automatically to your checking or savings account. Instead of a direct deposit refund, you can still choose to have your Form 944 overpayment applied to your next return by checking the appropriate box on line 12b. For more information, see the instructions for line 12b and Direct Deposit , later.

Make balance due payments electronically. EO 14247 also promotes operational efficiency by mandating the transition to electronic payments for all payments made to the federal government. Therefore, pay your balance due on Form 944 electronically. There are several easy, safe, and secure ways to pay your balance due electronically. For more information, see the instructions for line 11, later.

Form 944 return transcripts are now available elec- tronically. You can now access your Form 944 return transcript for tax years 2023 and later using your IRS business tax account. For more information, go to IRS.gov/BusinessTranscript . To access your IRS business tax account, go to IRS.gov/BusinessAccount .

Withholding on qualified tips. For tax years beginning after 2024, and ending before 2029, P.L. 119-21, commonly known as the One Big Beautiful Bill Act, allows employees and self-employed individuals to deduct up to

$25,000 of qualified tips received in occupations that customarily and regularly received tips on or before December 31, 2024, on their income tax returns. Qualified tips are cash tips, which include voluntary cash or charged tips received from customers or, in the case of employees, through tip-sharing arrangements. Mandatory service charges added to the bill are not qualified tips. Employers must use an employee’s updated Form W-4, Employee’s Withholding Certificate, if one is submitted by the employee, and the federal income tax withholding procedures in Pub. 15-T, Federal Income Tax Withholding Methods, to allow the employee to account for their expected deduction and receive more money in each paycheck instead of waiting until filing their income tax return to receive the full benefit of this deduction. Tips are still generally subject to both the employer share and employee share of social security tax and Medicare tax if the tips received are $20 or more per month.

Employers and other payers must file information returns (for example, Forms W-2, 1099-MISC, and 1099-NEC) with the Social Security Administration (SSA) or the IRS, as applicable, and furnish statements to tip recipients showing cash tips received and the Treasury Tipped Occupation Code of the tip recipient. However, the IRS has provided transition relief to employers and payers for the tax year 2025 reporting requirements. For more information, see Notice 2025-62, 2025-48 I.R.B. 740, available at IRS.gov/irb/2025-48_IRB#NOT-2025-62 .

Withholding on qualified overtime compensation. For tax years beginning after 2024, and ending before 2029, P.L. 119-21 allows individuals (employees and other workers not treated as employees) to deduct up to $12,500 ($25,000 if married filing jointly) of qualified overtime compensation on their income tax returns. Qualified overtime is compensation that exceeds the regular rate of pay (such as the “half” portion of time-and-a-half compensation) that is required to be paid to an individual under section 7 of the Fair Labor Standards Act (FLSA) of 1938. The FLSA provides that employers must generally pay covered, nonexempt employees at least one-and-a-half times their regular rate of pay for hours worked over 40 hours per week. For more information about overtime compensation, go to dol.gov/ agencies/whd/overtime . Employers must use an employee’s updated Form W-4, if one is submitted by the employee, and the federal income tax withholding procedures in Pub. 15-T to allow the employee to account for their expected deduction and receive more money in each paycheck instead of waiting until filing their income tax return to receive the full benefit of this deduction. Overtime compensation is still generally subject to both the employer share and employee share of social security tax and Medicare tax.

Instructions for Form 944 (2025) Catalog Number 39820A Nov 24, 2025 Department of the Treasury Internal Revenue Service www.irs.gov

Employers and other payers must file information returns (for example, Forms W-2, 1099-MISC, and 1099-NEC) with the SSA or IRS, as applicable, and furnish statements to overtime recipients showing qualified overtime compensation paid during the year. However, the IRS has provided transition relief to employers and payers for the tax year 2025 reporting requirements. For more information, see Notice 2025-62 .