The One Big Beautiful Bill was signed recently, and some things were in the bill that we want you all to be aware of
Social Security
Social Security benefits will still be taxable. The bill does provide a temporary tax deduction for seniors age 65 and older in the amount of $6,000. The tax break is available to seniors whose income is under $75,000 for single filers and $150,000 for joint filers. This is set to expire in 2028. To qualify for the additional deduction, a taxpayer must be age 65 on or before the last day of the taxable year.
Over Time Pay
The first $12,500 of overtime pay for single filers and $25,000 for joint filers will be excluded from your federal income for the tax years 2025-2028. This bill does not make all overtime pay exempt from federal income tax. The portion that taxpayers may deduct from their pay is the portion that exceeds their regular rate of pay. (such as the “half” portion of “time-and-a-half” compensation) and is reported on your W-2, 1099, or other specified statement furnished to the individual. Employers and other payors are required to file information returns with the IRS (or SSA) and furnish statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.
Tips
Workers in qualified jobs where tipping is customary (servers, waitresses, hair stylists, nail techs, bartenders, etc.) can now deduct up to $25,000 of those tips from their taxable income. This does phase out for single filers making over $150,000 and over $300,000 for joint filers. This will expire in 2028. IRS will publish a list of occupations that "customarily and regularly" receive tips on or before October 2nd, 2025. Self-employed individuals in a Specified Service Trade or Business (SSTB) under section 199A are not eligible. Employees whose employer is in an SSTB also are not eligible. Employers and other payors must file information returns with the IRS (or SSA) and furnish statements to taxpayers showing certain cash tips received and the occupation of the tip recipient.
SALT Deduction
The SALT limit has increased from 10,000 to 40,000 for the years 2025-2029. The State and Local Tax Deduction allows taxpayers who itemize to subtract a certain state and local taxes. These items include property taxes, income taxes, and sales taxes.
Car Loan Interest
The law allows for a deduction of up to $10,000 of loan interest for purchased vehicles whose final assembly took place in the US. The deduction would apply to single filers with a modified adjusted gross income of $100,000 or less, and $200,000 or less for joint filers. Lease payments, used vehicles, and business or commercial use do not qualify.
