One Big Beautiful Bill Act

The One Big Beautiful Bill Act includes a major update to how taxes work, with the goal of making the system simpler, clearer, and easier to follow. It combines a bunch of changes into one package—like adjusting tax brackets, updating deductions and credits, and closing common loopholes. The bill also aims to make corporate taxes more straightforward and easier to manage, while improving how taxes are collected and reported. The idea is to cut down on confusion, reduce paperwork, and make sure the system works better for everyone.

Which provisions affect you?

While there are several new tax provisions, these are a few that will affect individual taxpayers the most.

Please know that as more information is released, these items may be edited for clarity and accuracy.

    • Who qualifies: Hourly and salaried non-exempt employees who work more than 40 hours a week.

    • What’s exempt: Up to $12,500 (single) or $25,000 (MFJ) of the premium income earned from overtime hours will be deductible income on federal tax returns. What is “premium income”? Think, the “half” of “time-and-a-half”.

    • Income cap: The exemption applies to taxpayers earning up to $150,000 (single) or $300,000 (MFJ) per year. Above that, the benefit phases out gradually.

    • Employer reporting: Employers will be required to report qualifying overtime pay separately on W-2 forms.

    • Temporary: This exemption is effective for 2025 through 2028.

    • Which vehicles qualify: New personal-use vehicles with at least two wheels and a GVW of less than 14,000 pounds with final assembly taking place in the US. Vehicles must be purchased, leases do not qualify.

    • What’s exempt: Up to $10,000 of interest on loan originated after December 31, 2024

    • Income cap: The exemption applies to taxpayers earning up to $100,000 (single) or $200,000 (MFJ) per year. Above that, the benefit phases out gradually.

    • Reporting: More to come on that.

    • Temporary: This exemption is effective for 2025 through 2028.

    • Who qualifies: Taxpayers age 65 and older.

    • What’s exempt: Up to $6,000 for each taxpayer 65 or older. Taxpayers do NOT have to be drawing Social Security to qualify for the deduction.

    • Income cap: The exemption applies to taxpayers earning up to $75,000 (single) or $150,000 (MFJ) per year. Above that, the benefit phases out gradually.

    • Temporary: This exemption is effective for 2025 through 2028.

    • Tax brackets announced with the 2017 Tax Cuts and Jobs Act have been made permanent and indexed for inflation.

    • Tax brackets are 10%, 12%, 22%, 24%, 32%, 35% and 37%

    • Standard deductions announced with the 2017 Tax Cuts and Jobs Act have been made permanent and indexed for inflation.

    • 2025 standard deductions are:

      • Single/MFS: $15,750

      • MFJ/Qualifying Widow: $31,500

      • Head of Household: $23,625

    • Child tax credit increases to $2,200 (from $2,000) and is indexed for inflation.

    • Other dependent credits remain at $500

    • Increases the deduction of state and local tax (SALT) announced in the 2017 Tax Cuts & Jobs Act from $10,000 to $40,000.

    • This increase is temporary and set to expire after 2029.

    • Reinstates Covid-era above-the-line deductions for charitable contributions.

    • Deduct up to $1,000 (single) or $2,000 (MFJ) without having to itemize.

    • This deduction begins in 2026 and is made permanent.

    • A new threshold of $2,000 paid in a calendar year that would normally be subject 1099 reporting.

    • This provision begins in 2026 and is indexed for inflation.

    • Terminates credits for purchasing new and used “clean” vehicles.

    • This termination becomes effective September 30, 2025.

    • Terminates residential clean energy credits beginning after December 31, 2025.