One, Big, Beautiful Bill Act: Tax Deductions for American Workers and Seniors
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One, Big, Beautiful Bill Act: Tax Deductions for American Workers and Seniors
2026-03-27
The One, Big, Beautiful Bill Act (Public Law 119-21) contains new tax deductions, effective starting in 2025, for workers, tipped earners, overtime earners, personal vehicle purchasers, and seniors.
The main deductions introduced are:
No tax on tips
From 2025 to 2028, employees and self-employed individuals can deduct qualified tips (cash or charged) received in occupations determined by the IRS to regularly receive tips.
The annual cap is $25,000 for individuals and joint filers.
There is a modified gross income cap: the deduction decreases for those earning more than $150,000 or $300,000 for joint filers.
This deduction does not apply to those employed in a specified service trade or business (SSTB). Employers must file information returns with the IRS and furnish statements to taxpayers showing cash tips received and the occupation of the tip recipient.
No tax on overtime
Also effective from 2025 to 2028, this deduction allows the deduction of the excess portion of overtime pay (the portion above the regular rate) reported on a W-2 or 1099.
The limit is $12,500 for individuals and up to $25,000 for joint returns.
The deduction begins to phase out for modified gross income over $150,000 or $300,000 combined.
No tax on car loan interest
Between 2025 and 2028, you can deduct the interest paid on a loan. That is, the loan must be originated after December 31, 2024, to purchase a vehicle that meets certain requirements, such as: Final assembly must have been performed in the U.S. (the vehicle tag or VIN may indicate this), it must be new (not used), and finally, it must be for personal, not business, use.
The deduction cap is $10,000 per year. There is also a modified gross income threshold for this deduction ($100,000 individually, $200,000 jointly) before it begins to phase out.
Additional deduction for seniors
From 2025 to 2028, those age 65 and older can claim an additional deduction of $6,000 (for each eligible individual).
For couples where both qualify, it would be up to an additional $12,000.
The additional deduction phases out as modified gross income exceeds $75,000, or $150,000 for joint returns. Deduction is available for itemizing and non-itemizing taxpayers.
If you need help with your tax return, My Accounting Now has a team of accounting specialists. Call us at 786-228-8689 or email us at info@myaccountingnow.com