Nevada Lawmakers in Congress are pressing the Internal Revenue Service (IRS) to explain why it has not released detailed tax-filing data, including figures on deductions for tipped income. The five Democrats say the information is needed to oversee a tax break aimed at workers central to the state’s tourism and hospitality economy.
Background: Treasury Department Delays IRS Data on Overtime Wages and Tipped Income Under One Big Beautiful Bill Act
Sens. Catherine Cortez Masto and Jacky Rosen and Reps. Steven Horsford, Susie Lee and Dina Titus signed the letter. They asked the agency why the more granular information for this year’s filing season remains unavailable.
The lawmakers called tipped-income deductions “a priority in the state with the greatest share of workers who earn gratuities.” They also raised concern “that the data is being withheld from the public for political reasons due to the upcoming midterm elections.”
They wrote that they “have long supported tax relief for the tipped workers who make up the backbone of their state's tourism- and hospitality-driven economy,” adding: “We remain committed to ensuring this policy succeeds, and obtaining accurate tax data is critical to guiding our continued oversight and support.” The letter also notes that no Democrats voted for the tax overhaul.
The deduction covers tips, with an income-based phaseout
The No Tax on Tips provision is part of the One Big Beautiful Bill Act, signed into law July 4, 2025, as Public Law 119-21. Section 70201 allows employees and self-employed people to deduct qualified tips, subject to an income phaseout.
For tax year 2025, filed in 2026, the annual deduction can reach $25,000. The phaseout begins at $150,000 in modified adjusted gross income, or $300,000 for joint returns. The provision applies from January 1, 2025, through December 31, 2028.
The law also created a separate deduction for qualified overtime pay. That deduction is capped at $12,500, or $25,000 for married couples filing jointly.
The tips deduction is federal-only and is claimed on Form 1040. It does not prevent states from taxing tip income.
The first filing year used temporary reporting rules
The IRS routinely releases more detailed data about tax incentives, including participation by income level. In prior years, those figures appeared within a few months after the April 15 filing deadline.
An administration official previously said the agency was processing returns submitted through Oct. 15, the extension deadline. That gives a sense of the volume being reviewed, but the lawmakers want the agency to explain why the detailed release has not followed its usual pattern.
The new deduction also arrived during a transition in tax reporting. The comment period for proposed regulations ended October 22, 2025, and Treasury and the IRS held a telephonic public hearing the next day. The deadline was not extended so final regulations could be issued in time to guide returns for the first year.
On November 5, 2025, Treasury and the IRS issued Notice 2025-62. It granted penalty relief for tax year 2025 when employers failed to separately report qualified tips, qualified overtime or occupation codes under IRC §§6721 or 6722, provided the returns were otherwise accurate and timely.
Notice 2025-69 confirmed that 2025 Forms W-2, 1099-NEC, 1099-MISC and 1099-K had not been revised to add separate reporting fields for those amounts. The first year therefore served as a transition period for employers and workers.
The IRS said on March 2, 2026, that taxpayers claiming the deductions on 2025 returns should use 2025 Schedule 1-A with the 2025 Form 1040 Instructions. The temporary employer relief addressed reporting penalties, while taxpayers used the new schedule to claim the deductions.
Separate tip and overtime reporting begins in 2026
Rep. Mike Thompson, a California Democrat, and other House Democratic tax writers, including Horsford, voiced similar concerns the previous week. The Nevada signers’ letter adds a state delegation’s request for an explanation of the delay and for figures that can inform further oversight.
Full reporting requirements begin in 2026, when Forms W-2 and 1099 are to include separate reporting of qualified tips and qualified overtime. The IRS’s instructions for Form 1099-K add Box 1c for cash tips reported under P.L. 119-21, section 70201, and Box 1d for Treasury Tipped Occupation Code(s), beginning with the 12/2026 form instructions.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
