One Big Beautiful Bill Act: 2025 Tax Deductions for Working Americans and Seniors
- Wilsandra Gomez-Brown, CPA
- Jul 17
- 2 min read
Signed into law on July 4, 2025, as Public Law 119-21, the One Big Beautiful Bill Act introduces a series of tax deductions aimed at easing the financial burden on working Americans and seniors. These provisions are effective for tax years 2025 through 2028 and apply to both itemizing and non-itemizing taxpayers.
🧾 “No Tax on Tips” Deduction
Who qualifies:Employees and self-employed individuals in occupations that customarily and regularly received tips as of December 31, 2024.
What’s deductible:Voluntary cash or charged tips reported on a Form W-2, Form 1099, or Form 4137.
Deduction limits:
Up to $25,000 annually
For self-employed individuals, deduction cannot exceed net income from the business where tips were earned
Phases out for incomes over $150,000 (single) or $300,000 (joint)
Exclusions:
Self-employed individuals in Specified Service Trades or Businesses (SSTBs) under section 199A
Employees working for SSTB employers
Requirements:
Must include Social Security Number
Must file jointly if married
Employers/payors must report tip income and occupation to the IRS
IRS Guidance:A list of qualifying occupations will be published by October 2, 2025. Transition relief will be provided for 2025.
⏱️ “No Tax on Overtime” Deduction
Who qualifies:Employees who receive qualified overtime compensation under the Fair Labor Standards Act (FLSA).
What’s deductible:The “half” portion of time-and-a-half pay that exceeds the regular rate.
Deduction limits:
Up to $12,500 (single) or $25,000 (joint)
Phases out for incomes over $150,000 (single) or $300,000 (joint)
Requirements:
Must include Social Security Number
Must file jointly if married
Employers/payors must report total overtime compensation
IRS Guidance:Transition relief will be available for 2025.
🚗 “No Tax on Car Loan Interest” Deduction
Who qualifies:Individuals who purchase a new personal-use vehicle with a loan originated after December 31, 2024.
What’s deductible:Interest paid on a secured auto loan for a new vehicle (not leased or used).
Deduction limits:
Up to $10,000 annually
Phases out for incomes over $100,000 (single) or $200,000 (joint)
Qualified vehicles:
Cars, SUVs, trucks, motorcycles under 14,000 lbs
Must be assembled in the U.S.
Requirements:
Must include Vehicle Identification Number (VIN) on the return
Lenders must report interest received to the IRS
IRS Guidance:Transition relief will be provided for 2025.
👵 New Deduction for Seniors
Who qualifies:Individuals age 65 or older by the end of the tax year.
What’s deductible:An additional $6,000 per qualifying individual, on top of the existing senior standard deduction.
Deduction limits:
Up to $12,000 for married couples where both spouses qualify
Phases out for incomes over $75,000 (single) or $150,000 (joint)
Requirements:
Must include Social Security Number
Must file jointly if married
To learn how these deductions may apply to your specific situation, schedule a free virtual intro meeting with me or consult another qualified tax professional. Personalized guidance can help ensure you maximize your benefits under the One Big Beautiful Bill Act and stay compliant with new IRS reporting requirements.
Over and out.
Wilsandra Gomez-Brown, CPA
Principal & Founder of W. Gomez CPA, LLC
Click here to schedule some time to talk.
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