OBBBA: One Big Beautiful Bill Resources

The Big Beautiful Bill Act:

What You Need to Know Now
By Joshua Jenson, CPA (JJ the CPA)

With the One Big Beautiful Bill Act (OBBBA) now law, and tax season here, individuals and business owners can no longer sit back and wait. Your taxes could be lower! Many provisions are retroactive, and ignorance or delaying action could be costly. This is not just a list of tweaks—it introduces brand-new tax laws and rewrites major sections of the tax code, with permanent changes, firm deadlines, and real opportunities for proactive planning.

Here’s a high-level look: starting with provisions that may already affect you, moving to updates that should be on your planning radar now, and ending with what’s coming next so you’re not caught off guard.

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No Tax on Tips! A New (Non-Itemized) Deduction: From 2025 through 2028, up to $25,000 of qualified tip income may be deducted annually. All tip compensation for employees and independent contractors remains reportable income, as this is a separately stated deduction available even if you don’t itemize. This deduction only reduces federal income tax and does not exempt tips from payroll or self-employment taxes. It applies per return and requires married couples to file jointly. The deduction phases out at higher income levels. Workers and employers must be prepared for additional tracking and reporting.

New Overtime Pay (Non-Itemized) Deduction: From 2025 to 2028, employees may deduct up to $12,500 of qualified overtime pay, with a $25,000 cap for married couples filing jointly. Only overtime required under the Fair Labor Standards Act qualifies. Overtime wages remain fully taxable and subject to payroll taxes, the deduction phases out at higher income levels, and additional tracking and reporting are required.

Senior Deduction Introduced: For tax years 2025 through 2028, individuals age 65 and older can claim a new $6,000 deduction in addition to the existing senior standard deduction, regardless of whether they itemize. Married couples may claim up to $12,000 if both spouses qualify but must file jointly. This deduction is unrelated to Social Security income.

New Car Loan Interest Deduction: From 2025 through 2028, individuals may deduct up to $10,000 per year in interest on loans used to purchase new vehicles for personal use. Loans must be secured by the vehicle and originated after December 31, 2024. Eligible vehicles must weigh under 14,000 pounds GVWR and be assembled in the United States.

Clean Energy Credits Winding Down: Several clean energy incentives are ending sooner than expected. Residential solar credits expired after 2025. EV credits ended after September 30, 2025, with EV charger credits ending June 30, 2026. Commercial solar and wind credits phase out after 2027 unless construction begins within twelve months of July 4, 2025.

SALT Deduction Temporarily Expanded: Beginning in 2025, the state and local tax (SALT) deduction cap increases to $40,000 per return, subject to a $10,000 floor and a phase-down for higher earners. The cap reverts to $10,000 in 2030.

Standard Deduction: The higher standard deduction is permanently indexed for inflation. For 2025, it increases to $15,750 for single filers, $23,625 for heads of household, and $31,500 for married couples filing jointly.

Child Tax Credit: Starting in 2025, the Child Tax Credit increases to $2,200 per qualifying child, with up to $1,700 refundable. The Other Dependent Credit remains $500.

Adoption Credit Partly Refundable: Beginning in 2025, up to $5,000 of the Adoption Credit becomes refundable and indexed for inflation.

PTET Workaround Continues: Business owners using pass-through entities can continue deducting state-level entity taxes federally, with no cap or phaseout.

Bonus and Section 179 Depreciation: Businesses benefit from permanently restored 100% bonus depreciation for assets acquired and placed in service after January 19, 2025. Section 179 expensing increases to $2.5 million effective January 1, 2025, phasing out after $4 million in total asset purchases, both indexed for inflation.

R&D Expensing Restored: Immediate expensing for domestic R&D costs resumes for expenses paid or incurred retroactively back to January 1, 2022.

Business Interest Limitation: Starting after 2024, businesses once again calculate interest deductions using an EBITDA-based formula.

ERC Changes: Permanent disallowance applied only to unpaid ERC claims for the third and fourth quarters of 2021 filed after January 31, 2024.

Qualified Small Business Stock: The Section 1202 gain exclusion is now permanent, with higher exclusions for stock gains if acquired after July 4, 2025, and held for at least 3 years, with an increased stair stepped exclusion after 4 and 5 years.

Looking further into 2026, current tax rates are locked in, personal exemptions remain eliminated, and the 20% qualified business income deduction becomes permanent. New charitable deductions return for standard filers, Opportunity Zones are extended, and reporting thresholds change for Forms 1099.

Several long-standing rules are made permanent, including limits on casualty losses, the $750,000 mortgage interest rules, and the elimination of miscellaneous itemized deductions subject to the 2% of AGI limitation. Estate and gift tax exemptions increase significantly beginning in 2026.

The Act also expands 529 and ABLE accounts, introduces a new Youth Empowerment savings account, and permanently extends benefits tied to paid family leave and student loan assistance.

Keep an eye on how your home state responds, as many of these changes affect federal income figures that flow into state tax calculations. Proactive planning isn’t optional anymore—it’s how individuals and business owners stay ahead.

Author Bio
Joshua Jenson, known as JJ the CPA, is a practicing CPA, author, speaker, and YouTuber with over 33 years of experience. He manages his own CPA firm, creating strategic tax plans and preparing tax returns for successful business owners in the service and real estate sectors. JJ also conducts tax webinars and live seminars for CPAs nationwide and online. He has authored five books on tax and business topics and hosts a podcast in which he discusses business issues with other professionals.