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The IRS has released guidance for the federal tips and overtime deductions enacted via President Donald Trump’s “big beautiful bill.”
However, reporting requirements for 2025 could cause confusion for returns filed in 2026, experts say.
The IRS guidance also included “transition relief” for certain workers who receive tips via a so-called “specified service trade or businesses,” or SSTBs.

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As tax season approaches, the IRS has released guidance for workers who can claim the federal deduction for tips and overtime pay enacted via President Donald Trump’s “big beautiful bill.”
The guidance released last week covers how to report these deductions on tax returns. But workers could still face questions at tax time, experts say. 

The tip provision allows certain workers to deduct up to $25,000 in “qualified tips” from 2025 through 2028. The tax break phases out once modified adjusted gross income exceeds $150,000, or $300,000 for married couples filing jointly.      
Meanwhile, Trump’s tax break for eligible overtime pay offers a deduction of up to $12,500 for single filers or $25,000 for joint filers, with the same income phaseouts. This provision is also temporary, in effect from 2025 through 2028.    

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Workers can deduct tips or overtime pay if those earnings are reported via so-called information returns, such as Forms W-2 or 1099, according to the legislation.
While the IRS is “strongly encouraging” employers to provide this reporting, it’s not required for tax year 2025, said Thomas Gorczynski, a Tempe, Arizona-based enrolled agent, which is a tax license to practice before the IRS.
Gorczynski, who also educates tax professionals on legislation changes, said: “We’re going to have this hodgepodge, weird year of rules that’s going to make reporting very difficult for employees.”

Approximately 6 million workers report tipped wages, according to IRS estimates. And nationally, about 6% of workers reported overtime pay in 2024, according to the Peter G. Peterson Foundation, an economic organization.
These taxpayers will soon have to navigate Trump’s tip and overtime deductions for 2025, which apply to their returns filed in 2026.  
“Taxpayer confusion will be off the charts at tax time on these provisions,” Terry Lemons, former communications and liaison chief for the IRS, said in a LinkedIn post last week.

‘Transition relief’ for some tipped workers

The new IRS guidance also includes “transition relief” for certain workers who receive tips via a so-called “specified service trade or businesses,” or SSTBs.
Trump’s 2017 tax law outlined the list of SSTBs to limit eligibility for a 20% deduction for certain businesses, and includes sectors like health care, legal, financial services, performing arts and more.
SSTB workers are excluded from claiming the new tip deduction under Trump’s “big beautiful bill.” But these workers may briefly be eligible for the tip deduction until the Treasury Department and IRS finalize regulations.
“I don’t want people to think that this new waiver is the permanent provision or a permanent guidance,” Gorczynski said.
It’s a “temporary waiver” for some SSTB workers to claim the tip deduction for 2025, he said. But there could be an “unhappy surprise” in 2026 and future years if eligibility goes away. More

Enhanced Affordable Care Act subsidies are poised to disappear at year’s end if Congress doesn’t extend them.
If that happens, households with incomes over 400% of the federal poverty line would be ineligible for any premium tax credits.
Households with flexible work hours might opt to work less to reduce their income and qualify for premium subsidies, experts said.

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An impending “cliff” in federal health insurance subsidies may discourage some people from working, so that they can save thousands of dollars on annual insurance premiums, according to policy experts and financial planners.
Enhanced subsidies for health plans bought on the Affordable Care Act marketplace are set to expire at the end of 2025, the policy issue at the heart of the recent government shutdown. The federal aid, also known as enhanced premium tax credits, reduces recipients’ out-of-pocket premiums, either upfront or in a lump sum at tax time.

About 22 million Americans — roughly 92% of people who buy insurance on the ACA marketplace — currently receive those enhanced subsidies. Recipients are expected to see their annual health premiums more than double, on average, next year if the benefit is not renewed.  
Households whose earnings exceed a certain threshold — 400% of the federal poverty line — are most exposed, according to policy experts.
They’d lose all access to subsidies, meaning they’d pay the full, unsubsidized insurance premium for an ACA health plan.  
This is the so-called subsidy cliff.

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The cliff creates an incentive for households with some income flexibility — say, hourly workers or self-employed business owners — to work less and dip below that threshold, experts said.

“It’s an unfortunate disincentive to work,” said Cynthia Cox, vice president and director of the Affordable Care Act program at KFF, a nonpartisan health policy research group.
“For some families, [working less] totally makes financial sense, especially if they really need the health insurance,” she said.
Democrats have pushed for an extension of enhanced ACA subsidies, which have been in place since 2021 under a Covid-19 relief package.
As part of talks to end the shutdown, Republicans vowed to vote by the middle of December on a measure to extend the enhanced subsidies. However, policy experts say such legislation faces long odds of success in a Republican-controlled Congress. The White House said it would issue a framework as soon as this week to address rising ACA premiums, but its proposal was reportedly delayed amid congressional backlash.

ACA premium tax credits would revert to their pre-pandemic level if the enhanced subsidies were to lapse.
Under that policy, households were ineligible for premium subsidies if their income exceeded 400% of the federal poverty level. That structure had been in place since 2013.
Millions of households are on the cusp of the 400% threshold.
In 2025, 7% of ACA enrollees — about 1.8 million people — had incomes between 300% and 400% of the federal poverty line, according to an analysis of federal data by the Bipartisan Policy Center, a nonpartisan think tank. Another 3%, or 725,000, had an income between 400% and 500%, it found.
The bulk, about 82%, have incomes below 300% of the federal poverty line, according to the analysis.
There are about 24 million total ACA enrollees in 2025.

‘Literally just stop working’

The income range and the potential financial hit of the subsidy cliff vary by factors such as household size.
For example, a one-person household earning more than $62,600 in 2026 would lose all ACA subsidies, which are also called premium tax credits. For a four-person family, that threshold is $128,600.
Here’s one example of the financial calculus at play, for the average 45-year-old couple with two children, ages 10 and 12, earning an annual income of $132,000.
With enhanced subsidies, the family would pay $11,220 in annual health premiums, or $935 per month, for a benchmark silver-tier plan in 2026, amounting to 8.5% of their annual income, according to a KFF cost calculator.
Without any subsidies, they would pay about $25,900 in annual premiums, or roughly $2,160 per month, for the same plan, amounting to almost 20% of their income, according to KFF.
In this case, reducing their work income by about $4,000 would save them about $14,700 in health premiums next year.

“If someone is going to end up being $5,000 over the cliff, they should literally just stop working,” said Jeffrey Levine, a certified public accountant and certified financial planner based in St. Louis.
Of course, the disincentive effect may be stronger or weaker depending on the specific household.
For example, without enhanced subsidies, the average 45-year-old earning $65,000 in 2026 would see their annual ACA premiums increase to about $8,470 for a benchmark silver-tier plan, up from $5,530 with the subsidies, according to KFF.
Therefore, this person would save about $2,940 on health premium costs if they were to reduce their work income by more than $2,400 — for just $540 or so of net savings.
Someone just over the income threshold would generally see a “meaningful” loss of federal health benefits, but the overall discouragement to work is unclear, said Jonathan Burks, executive vice president for economic and health Policy at the Bipartisan Policy Center.

Medicaid, food stamps also have benefit cliffs

The ACA subsidy cliff isn’t the only example of means-tested benefits that may influence consumers’ incentive to work, Burks said.
Federal programs like Medicaid and Supplemental Nutrition Assistance Program, formerly known as food stamps, have their own respective benefit cliffs, for example, he said.
Conservative-leaning economists have generally scrutinized such federal programs to gauge if they make people less likely to work, said Burks. He called the real-world economic evidence on that “mixed.”
Most benefit cliffs impact programs aimed at lower earners, while the ACA subsidy cliff would kick in for households with somewhat higher incomes, he said.
Generally, it’d be ideal from a policy standpoint to design gradual income phase-outs, so federal benefits throttle down gently for households as their incomes increase, Burks said. However, federal budget constraints generally make such a policy design more challenging, he said.
“There’s always a challenge with any means-tested program with how to handle eligibility thresholds in ‘border land,'” he said. More

Just two-thirds of parents age 55 or older with at least $500,000 in investable assets haven’t shared with their grown children what they’ll inherit or if they’ll inherit anything at all, according to a new study.
However, avoiding the conversation can cause problems after you’re gone, especially if you plan to distribute your assets among your heirs unevenly.
“We generally recommend they at least tell their kids how the assets are going to be divided,” said CFP K.C. Smith, managing associate at Henssler Financial in Kennesaw, Georgia, which ranked No. 46 on CNBC’s Financial Advisor 100 list for 2025.

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Older Americans really don’t like talking to their adult children about inheritances, a new study suggests.
About two-thirds — 68% — of parents age 55 or older with at least $500,000 in investable assets haven’t told their grown children what they’ll inherit or if they’ll inherit anything at all, according to Fidelity Investments’ 2025 Family and Finance Study. Roughly a third, 35%, don’t want their children to know how much they’ll get.

Reluctance to divulge estate plans is common, financial advisors say. Reasons can include concerns about demotivating their kids or starting conflict, or even just an unease with discussing money in general, said certified financial planner Mitchell Kraus, founder and principal of Capital Intelligence Associates in Santa Monica, California.
“But avoiding the conversation usually creates bigger problems later,” Kraus said. 

$124 trillion expected to go to heirs by 2048

The Fidelity study involved parents ages 55 and older with at least $500,000 in investable assets and whose children are ages 25 to 54, as well as a matched sample of adults ages 25 to 54 who have a living parent age 55 or older with at least $500,000 in investable assets.
The bulk of those adult children — 95% — say they’re ready to manage inherited wealth, Fidelity found, even though 25% of their parents disagree.

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There’s an estimated $124 trillion that baby boomers — those born from 1946 to 1964 — and older generations will pass on between 2024 and 2048 as part of the so-called great wealth transfer, according to research from Cerulli Associates. Of that amount, $105 trillion is expected to go to heirs, and the remainder to charity. More than half of that $124 trillion is expected to come from people with at least $5 million in investable assets, according to Cerulli.

You don’t need to share ‘exact numbers’

Financial advisors typically recommend discussing your estate plans with your adult children — even if you only offer a broad overview.
“We generally recommend they at least tell their kids how the assets are going to be divided,” said CFP K.C. Smith, managing associate at Henssler Financial in Kennesaw, Georgia, which ranked No. 46 on CNBC’s Financial Advisor 100 list this year.
“You can share some basic information about the structure of your estate plan, but you can keep the exact numbers undisclosed if you think it would be problematic,” Smith said.
An estate plan isn’t only for the rich. In basic terms, it should include not just a will that dictates where you want your assets to go, but also who gets powers of attorney for financial decisions if you are unable to handle them on your own, as well as a living will, which specifies your wishes for end-of-life health care.
There is a particular situation when it may be best not to discuss plans with an adult child, said certified financial planner David Kozlowski, president of Verus Financial Partners in Richmond, Virginia, which ranked No. 8 on the CNBC Financial Advisor 100 list this year.
It’s “when they are still enabling their adult child,” Kozlowski said.
If the goal is financial independence, “discussing inheritance with children that retirees are still supporting will lead to more dependence on their parents, not less, in our experience,” he said.

Handling uneven inheritances

Additionally, it may be harder to want to share information about unevenly passing on your assets — i.e., one sibling getting more or less than the others. However, financial advisors generally recommend getting the conversation out of the way to avoid conflict after you’re gone.
“When parents explain the thinking behind their decisions, adult children almost always respond better, even if the plan isn’t perfectly equal,” Kraus said. “It gives them context and prevents that classic moment down the line when someone asks, ‘Why did Mom do this?’ at a time when no one can answer.”
There also may be another reason to avoid talking about exact numbers, Smith said. “Just because there are ‘X’ dollars today, it doesn’t mean it’s going to look like that at death,” he said.

Circumstances will change, Smith said, and it’s impossible to know how dramatically. “If something happens that we had not projected, then the [inherited] amount could be substantially different,” Smith said.
However, if the inheritance is likely to affect the child’s estate or tax planning unexpectedly, it may be worth giving them a better idea of what’s coming their way.
It’s also a good idea to include some other key estate planning information with your adult children, such as who do they call if something happens to you, where is the will or trust document stored — “things like that so they aren’t scrambling when they obviously are going to be grieving and doing an estate settlement, which can be complicated,” Smith said. More

Black Friday is typically the biggest shopping event of the year, but several reports show a potential pullback in 2025.
Many Americans are facing mounting challenges in an increasingly bifurcated consumer economy.

People walk past an Aritzia store on Fifth Avenue on Black Friday, in New York City on November 29, 2024. 
Adam Gray | AFP | Getty Images

Black Friday is one of the biggest shopping days of the year.
But amid concerns about the economy, persistent inflation and President Donald Trump’s latest wave of tariff hikes, shoppers may not be as eager to splurge this season.

Consumers plan to spend an average of $622 between Nov. 27 and Dec. 1, down 4% from last year, according to a new Deloitte survey released Monday. The overall belt-tightening was largely due to a higher cost of living and financial constraints, Deloitte found.

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The Black Friday-Cyber Monday week is typically the unofficial start of the holiday shopping season, although many shoppers started earlier this year to make the most of sales events like Amazon Prime Day and to get ahead of tariff-induced price increases.
Overall, shoppers are trying to spread out their spending to be “more strategic,” according to Stephanie Carls, a retail insights expert at RetailMeNot. That also includes stacking savings, such as pairing sales events with promo codes or coupons as well as cash-back offers.
“They are using every tool that they can to protect those budgets,” Carls said.

Debt issues have been affecting a growing number of consumers across all income levels, several studies show. For many Americans, wage gains have largely not kept pace with stubborn inflation, which makes it harder to make ends meet in a typical month.

Still, shoppers tend to rely on Thanksgiving week promotions for their gift buying: About 60% have already put items in their carts to purchase over the holiday shopping weekend, but 38% say they plan to only buy the items that are at least 50% off, Deloitte found.
“Value continues to be the centerpiece of the holiday season,” Brian McCarthy, principal and retail strategy leader at Deloitte Consulting, said in a statement.

Other reports also show a potential pullback this year. According to a recent LendingTree report, 64% of Americans plan to shop on Black Friday, but 39% said higher prices will lead them to spend less this year.
One “notable headwind,” according to the National Retail Federation, was the longest federal government shutdown in U.S. history, which lasted 43 days.
Americans were already facing mounting challenges in an increasingly bifurcated consumer economy. Income disruptions just ahead of the peak shopping season make budgeting particularly difficult, according to NRF’s holiday sales forecast.

A ‘K’-shaped holiday season

Overall economic growth in the U.S. has been good, but not all Americans have benefited, according to Scott Wren, senior global market strategist at Wells Fargo Investment Institute.
In the so-called “K”-shaped economy, some consumers are in financial distress because their incomes have not kept pace with inflation over the last five years. “That means their buying power has diminished as the overall price level of goods and services has risen noticeably,” Wren wrote in a Nov. 12 research note.
At the same time, consumers at the higher end of the income scale have strengthened their financial position, largely by benefiting from stock market rallies and appreciating home values. “Their discretionary income continues to be strong and funds the purchases of cars, houses, vacations, and meals at restaurants,” Wren wrote.
Although, according to Deloitte’s survey, even higher-income households plan to cut back during the Black Friday-Cyber Monday week.
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Starting at age 73, most retirees must start required minimum distributions, or RMDs, from pretax accounts.
Your first RMD is due by April 1 of the year after turning 73, and Dec. 31 is the deadline for future withdrawals.
If you don’t take your full RMD by the due date, the penalty is 25% of the amount you should have withdrawn.

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As December approaches, some older Americans must soon take required withdrawals from retirement accounts — and mistakes can be costly, according to financial experts. 
Starting at age 73, most retirees must start required minimum distributions, or RMDs, from pretax accounts, based on your balances, age and an IRS “life expectancy factor.”

Your first RMD is due by April 1 of the year after turning 73, and Dec. 31 is the deadline for future withdrawals. Waiting until April 1 after turning 73 means you would need two RMDs that year.

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Millions of retirees must follow complicated RMD rules or potentially face an IRS penalty. The requirements can be difficult to follow amid changing legislation and IRS guidance, experts say.
“RMD mistakes rarely come from neglect. They come from complexity,” said certified financial planner Scott Van Den Berg, president of advisory firm Century Management in Austin. “People don’t realize how many accounts they have, who’s responsible for what or how quickly the rules have changed.”
If you don’t take your full RMD by the due date, the penalty is 25% of the amount you should have withdrawn. But that can be reduced to 10% if the RMD is “timely corrected” within two years, according to the IRS.
Here are some of the biggest RMD mistakes and how to avoid them.

One of the ‘biggest mistakes’ is waiting  

While Dec. 31 is the RMD deadline for most retirees, many investors don’t start the process soon enough, according to CFP Tom Geoghegan, founder of Beacon Hill Private Wealth in Summit, New Jersey.
“One of the biggest RMD mistakes is waiting until December to sort everything out,” he said. “When retirees rush, they are more likely to miscalculate the [RMD] amount, sell the wrong assets or miss the deadline altogether,” he said. 
By starting early, there is more time to verify the year-end balance needed to calculate the RMD, confirm beneficiary details and pick the best way to pull cash from the portfolio, Geoghegan said.

Missed accounts

When calculating RMDs, you need to consider the requirements for each one and tally each RMD for your final number.
But one of the biggest mistakes is skipping accounts, such as an old 401(k), a forgotten rollover or an inherited individual retirement account from years ago, said Van Den Berg of Century Management.
However, you can avoid this error by making a “master list” of your accounts every January, including which company holds the assets and the RMD requirements for each one, he said.

‘Underused’ qualified charitable distributions

If you donate money to charity, you can use so-called qualified charitable distributions, or QCDs, which are direct transfers from an IRA to an eligible nonprofit, to reduce RMDs.
The move is “underused” and can satisfy your yearly RMD, according to Geoghegan of Beacon Hill Private Wealth.
Once you’re age 70½ or older, you can use QCDs to donate up to $108,000 in 2025. For married couples filing jointly, spouses aged 70½ or older can also transfer up to $108,000 from their IRA.
Another benefit of QCDs is the strategy will “keep the income off the tax return, which helps with Medicare surcharges,” Geoghegan said. More

Even as the U.S. economy adds jobs, there are fewer entry-level positions for college graduates just entering the labor market.
“For the first time in modern history, a bachelor’s degree is no longer a reliable path to professional employment,” Gad Levanon, chief economist at the Burning Glass Institute, told CNBC.

Even as the U.S. economy adds jobs, there are fewer employment prospects for college graduates just starting out, as those armed with a newly minted diploma are facing one of the toughest job markets in a decade, studies show.
“Right now is a really difficult time to find a job,” Cory Stahle, senior economist at Indeed Hiring Lab, told CNBC.

By many measures, the labor market is still relatively strong. The U.S. economy added more jobs than expected in September, according to the Bureau of Labor Statistics. However, the overall unemployment rate edged up to 4.4%, and for younger workers, ages 16 to 24, unemployment was 10.4% in September.
The current job market “is an enormous challenge for members of Gen Z who are just now entering the labor force,” a report published this week by Oxford Economics says.
Rising youth unemployment could be an “early indicator that the economy is slowing down or maybe even heading towards a recession,” said Anders Humlum, assistant professor of economics at the University of Chicago.

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A college degree is often considered the best pathway to a well-paying job, but that may no longer be as true as it once was, experts say.
“For the first time in modern history, a bachelor’s degree is no longer a reliable path to professional employment,” Gad Levanon, chief economist at the Burning Glass Institute, told CNBC.

An analysis by Goldman Sachs found that the “safety premium” of a college degree is shrinking. Although college graduates are still less likely to be unemployed than their non-degree counterparts, the advantage is smaller than it’s been in decades.

Job market worsens for recent grads

For recent college graduates, the cracks are starting to show.
Some large employers have said they’re replacing entry-level workers with artificial intelligence in order to streamline operations and cut costs. Concerns about the economy, persistent inflation and a slowdown in consumer spending are also likely contributors to an erosion of entry-level opportunities, other research shows.
Although members of the Class of 2025 submitted more job applications than did their 2024 counterparts — 10 and six, respectively — they received fewer job offers on average than did the previous class, with mean numbers of .78 and .83, respectively, the National Association of Colleges and Employers found. NACE’s study, conducted April 1-May 30, 2025, surveyed 1,479 graduating seniors.
According to a report by education technology company Cengage Group, in its survey conducted in June and July 2025 only 30% of 2025 graduates said they had secured a full-time job in their field and only 41% of the Class of 2024 said they had done so. The survey included 971 recent graduates across the U.S.
“These workers are a vital part of the labor market, and if they’re having a hard time, that means the economy could be having a hard time,” said Indeed’s Stahle.

The market for 2026 graduates could be as bad or worse.
Employers are less optimistic about the overall job market for upcoming grads than they were in the last several years, according to a separate report by the National Association of Colleges and Employers. 
About half, or 51%, of employers rated the job market for this year’s college seniors as poor or fair, the highest share since 2020-21.

‘A long-term scarring impact’

A weak labor market can have a negative effect on younger workers’ economic well-being over time, particularly in terms of wage growth and earning potential, according to Oxford’s report.
“Unemployment is rising and wage growth is declining for young adults, which could have a long-term scarring impact,” said Grace Zwemmer, associate economist at Oxford Economics and author of the report. 
“If these workers have a hard time getting into jobs now … that also impacts their earning capabilities,” Stahle said. “You start to add these things together and it really can lead to further widening in income inequality.”
“There are big economic implications down the road,” he said.
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