The "One, Big, Beautiful Bill Act" & What It Means to You.

With President Trump signing the O3B Act on July 4th, 2025 as Public Law 119-21 and the changes set to take affect in 2025 it is important to know how it will affect you. While this list is not complete with all the changes, these are the changes that will affect the majority of the population.

1. No Tax on Tips

The "No Tax on Tips" deduction is effective for 2025 through 2028. This deduction applies to "qualified tips" meaning voluntary tips from customers and split via tip sharing. This deduction is limited to $25,000 and phases out for taxpayers with modified adjusted gross income (MAGI) over $150,000 ($300,000 for joint filers).

Taxpayers, if married, must file jointly in order to receive this deduction.

The IRS will provide a list of occupations that "customarily and regularly" receive tips by October 2nd 2025 for more guidance on this matter.

2. No Tax on Overtime

The "No Tax on Overtime" portion of the O3BA is effective from 2025 through 2028. This deduction is capped at $12,500 for single filers and $25,000 for joint filers. The overtime deduction is phased out with a MAGI over $150,000 and $300,000 for joint filers.

Employers and payroll providers are required to furnish statements to taxpayers showing the total amount of qualified overtime paid throughout the year.

3. No Tax on Car Loan Interest

The "No Tax on Car Loan Interest" portion of the O3BA is effective from 2025 through 2028 for "qualified vehicles" up to $10,000 in interest for the year. A qualified vehicle is a new, personal use vehicle, secured by a lien on the vehicle. The vehicle must be under 14,000 pounds and must have a final assembly location in the United States. In order to receive this deduction the taxpayer must include the Vehicle Identification Number (VIN) on the tax return for any year that the deduction is claimed.

The IRS has a link to the "Vin Decoder" on the National Highway Traffic Safety Administration (NHTSA) to check your vehicles final assembly location.

Lenders of qualified interest must file information returns with the IRS and provide statements to the taxpayer showing the total amount of interest received during the taxable year.

4. Deduction for Seniors

Seniors aged 65 or older on the last day of the tax year from 2025 through 2028 will qualify for a $6,000 senior deduction, $12,000 for a married couple that are both over 65 years old. This deduction phases out with MAGI over $75,000 and $150,000 for joint filers.

5. Charitable Contribution Expense

The One Big Beautiful Act also brings a welcomed expense allowing people who take the standard deduction to expense out up to $1,000 for single filers and $2,000 for joint filers without having to itemize for the benefit.

If you would like to know more about the upcoming changes or would like to know how this will affect you then please feel free to contact us by email.