How The “One Big Beautiful Bill” Could Affect Your Taxes
On July 4, 2025, President Donald Trump signed into law what’s being called the One Big Beautiful Bill—a sweeping tax and budget law that introduces several new deductions aimed at individuals and families. While the IRS is still ironing out some of the reporting requirements, here are a few highlights that may directly impact you.
1. New Deduction for Tips
If you work in a profession where tips are customary, you may now be able to deduct up to $25,000 in qualified tips received between 2025 and 2028. Both employees and self-employed individuals can benefit, but income limits apply, and the IRS will publish a list of eligible occupations later this year.
2. Deduction for Overtime Pay
For the first time, certain overtime earnings can be deducted. Individuals may deduct up to $12,500 ($25,000 for joint filers) in qualified overtime pay during 2025–2028. Like the tips deduction, this benefit phases out for higher-income taxpayers.
3. Car Loan Interest Deduction
Purchasing a new personal-use vehicle? You may now deduct up to $10,000 per year in interest paid on qualifying car loans. The vehicle must be new, assembled in the U.S., and not used for business. Used cars and leases do not qualify.
4. Extra Deduction for Seniors
Individuals 65 and older can now claim an additional $6,000 deduction ($12,000 for married couples where both qualify). This is on top of the existing standard deduction increase for seniors.
Why This Matters
These changes may sound straightforward, but they come with detailed eligibility rules and reporting requirements. Employers, lenders, and even dealerships will be required to file additional forms with the IRS, and taxpayers must keep accurate records to claim these deductions.
Next Steps
The One Big Beautiful Bill contains dozens of other provisions not covered here. If you think you may qualify for any of these new deductions—or if you’re unsure how the changes impact your tax planning—consult with a qualified tax professional.
As always, we encourage you to do your own research, and you can view detailed information about the tax implications at the IRS website.
At HMA Law, we help individuals and business owners understand and navigate complex tax law changes. If you’d like to discuss how this new law may affect your 2025 tax return, reach out to schedule a consultation.