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Welcome to the One, Big, Beautiful Bill Act

Discover the comprehensive changes and benefits brought by the One, Big, Beautiful Bill Act. From tax reforms to family credits, we break down the key provisions to help you understand how these changes affect you.

The new law adjusts the standard deduction and income brackets for inflation, meaning most taxpayers will see slightly lower taxable income and higher deductions starting in 2025 and 2026.

Updated Standard Deductions
Filing Status 2025 Deduction 2026 Deduction
Single / Married Filing Separately $15,750 $16,100
Married Filing Jointly / Surviving Spouse $31,500 $32,200
Head of Household $23,625 $24,150
Key Takeaways
  • Top tax rate stays at 37%, but income ranges increase slightly to match inflation.
  • Credits like the Adoption Credit and Childcare Credit are higher for 2026.
  • Estate tax exclusion rises to $15 million in 2026.

Starting in 2025, individuals age 65 and older can claim a new $6,000 Senior Deduction ($12,000 for married couples filing jointly). This is in addition to the regular standard deduction.

  • Available from 2025 through 2028.
  • Phases out for incomes over $75,000 (single) or $150,000 (joint).
  • Both itemizers and non-itemizers may qualify.

To qualify, taxpayers must be 65 or older by the end of the tax year and include their Social Security number on the return.

Between 2025 and 2028, employees and self-employed workers in tipped jobs can deduct up to $25,000 of qualified tip income each year ($50,000 for joint filers).

  • Applies to jobs where tipping is customary (restaurants, salons, etc.).
  • Deduction phases out above $150,000 income ($300,000 joint).
  • Tips must be reported properly to the IRS or on Form 4137.

The IRS will release an official list of eligible occupations by October 2, 2025.

From 2025 through 2028, individuals who receive overtime pay can deduct the portion of their pay that exceeds their regular hourly rate — up to $12,500 per year ($25,000 for joint filers).

  • Phases out above $150,000 income ($300,000 joint).
  • Applies to qualified overtime reported on W-2 or 1099 forms.
  • Employers will need to issue annual statements of qualified overtime pay.

Between 2025 and 2028, taxpayers can deduct up to $10,000 per year in interest paid on a qualified car loan, if the vehicle is used for personal (non-business) purposes.

  • Loan must originate after December 31, 2024.
  • Vehicle must be new and assembled in the United States.
  • Used vehicles and leases do not qualify.

The deduction phases out for incomes above $100,000 (single) or $200,000 (joint).

Enhancement of Adoption Credit (Sec. 70402)

The One Big Beautiful Bill makes the adoption tax credit partially refundable up to $5,000 (indexed for inflation) beginning in taxable years starting after Dec. 31, 2024. Any carried forward amount cannot be used to calculate the refundable portion of the credit in future years.

No tax on car loan interest (Sec. 70203)

The Department of the Treasury and the Internal Revenue Service provide transitional guidance for businesses required to report car loan interest under the One, Big, Beautiful Bill. Notice 2025-57 PDF provides penalty relief and guidance to certain lenders for new information reporting requirements for car loan interest received in 2025 under the OBBB.

Transition relief for 2025

Notice 2025-57 PDF provides transitional relief for 2025 for lenders and other interest recipients who are required to file information returns with the IRS and provide statements to borrowers showing the total amount of interest received on qualified passenger vehicle loans and other information related to the loan.

Revision to de minimis rules for third party network transactions. (Sec. 70432)

The One, Big, Beautiful Bill retroactively reinstated the reporting threshold in effect prior to the passage of the American Rescue Plan Act of 2021 (ARPA) so that third party settlement organizations are not required to file Forms 1099-K unless the gross amount of reportable payment transactions to a payee exceeds $20,000 and the number of transactions exceeds 200.

COVID-related employee retention credits (Sec. 70605)

Limitation on credits and refunds for Employee Retention Credits (ERC) claimed for the third and fourth quarters of 2021 that were filed after Jan. 31, 2024 was enacted under the One, Big, Beautiful Bill. The IRS provides FAQs that addresses general information on the limitation, when a claim is timely filed, and what appeals rights are available if an ERC claimed on a return is disallowed.

Permanent renewal and enhancement of opportunity zones (Sec. 70421)

In 2018, certain economically distressed census tracts in the United States and its territories were designated as Qualified Opportunity Zones by the Treasury Department. Taxpayers who invest in QOZs receive certain tax benefits for their investments as an incentive to improve economic growth and job creation in these underserved communities.

Expiring clean vehicle credits (Sec. 70501, 70502 and 70503)

New Clean Vehicle Credit (30D): The credit will not be allowed for any vehicle acquired after September 30, 2025. Used Clean Vehicle Credit (25E): The credit will not be allowed with respect to any vehicle acquired after September 30, 2025. Qualified Commercial Clean Vehicle Credit (45W): The credit will not be allowed for any vehicle acquired after September 30, 2025.

Recognizing Indian tribal governments to determine whether a child has special needs for purposes of the Adoption Credit (Sec. 70403)

The One Big Beautiful Bill recognizes Indian tribal governments for purposes of determining whether a child has special needs for purposes of the adoption tax credit. This provision provides parity to Indian tribal governments, giving tribal governments the same ability as state governments to determine whether a child has special needs for the purposes of the adoption tax credit.

One Big Beautiful Bill: SALT deduction and Homeowner benefits

As a homeowner, you're likely familiar with the complexities of taxes. With the recent passage of the One Big Beautiful Bill Act (OBBBA), you might be curious about the immediate changes you should know and how they will affect your tax filing next year.
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