Does the proposed rule about qualified tips change how to count an employee’s compensation?

The Treasury department’s notice of proposed rulemaking about qualified tips is scheduled to be published Monday, September 22. The prepublication text is available at https://public-inspection.federalregister.gov/2025-18278.pdf.

For my law practice, this is only an academic curiosity.

Does anything in this proposed rule change how a retirement plan’s administrator counts an employee’s compensation?

My understadnign is no.  W2 reportinb (Box 1) is completely unchanged.  The participant is eligible to claim a deduction on their 1040.  Same for overtime.

I realize not all plans use the W-2 definition of wages but the same logic applies.  This is solely a new deduction for people to claim. it is does not eliminate income.