One Big Beautiful Bill (OBBB)

A $6,000 "Senior Deduction" - Tax-Free Security for Most

"Will I still pay taxes on my Social Security?" For almost 9 in 10 seniors. the answer is now no. OBBB adds an extra $6,000 standard deduction per seniors 65+. MFJ seniors get $12,000 extra on top of their regular deduction. The result is 88% of social security recipients will owe zero federal tax on their benefits.

How it works: If you're 65 * you automatically qualify for this bonus deduction starting with your 2025 tax return. In most cases Social Security benefits become fully tax-free. Even if you itemize , you still get this $6,000 per person on top.

Income Limit: It begins to phase out once your income passes $75,000 (single) or $150,000 (couple). For every dollar above those limits, the deduction shrinks by about a 6% phase out rate.

This senior deduction expires after 2028, unless congress extends it or makes it permanent later.

SALT deduction cap raised:

The OBBB raises the cap on state and local tax deduction (SALT) from 10,000 to $40,000 through 2028 for federal taxes. This help people in high tax states, who itemize can now deduct a lot more of their property taxes and state income taxes on their federal return now.

Income limit is $500,000 and it will revert back in 2029 if congress does not extending the law

No Tax on Tips

Overview of the deduction

Effective 2025 through 2028, employees and self-employed individuals may deduct qualified tips they received in occupations the IRS identified as “customarily and regularly receiving tips” on or before December 31, 2024, and are reported on a Form W-2, Form 1099, another statement furnished to the individual, or on Form 4137 if the individual directly reports the tips.
“Qualified tips” include voluntary cash or charged tips received from customers, including shared tips.
Maximum annual deduction is $25,000.
For self-employed individuals, deduction cannot exceed net income (before this deduction) from the trade or business where tips were earned.
Phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

Who qualifies

Individuals who:

Have a Social Security number (SSN)
Claim itemized or non-itemized deductions

Who doesn’t qualify

Individuals who are:

Self-employed in a Specified Service Trade or Business (SSTB) under Section 199A
Employees of an employer in an SSTB

How to claim the deduction

Include your Social Security number on the return
File jointly if you’re married

Reporting requirements

Employers and other payors must report certain cash tips and the occupation of the tip recipient on IRS (or SSA) information returns.
Treasury and IRS will provide penalty relief for tax year 2025.

No tax on overtime

Overview of the deduction

Effective 2025 through 2028, individuals may deduct the portion of qualified overtime pay that exceeds their regular rate of pay (for example, the “half” portion of “time-and-a-half”).
Overtime must be reported on Form W-2, Form 1099, another statement furnished to the individual, or directly by the individual.
Maximum annual deduction is $12,500 ($25,000 for joint filers).
Phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

Who qualifies

Taxpayer who:

Have a Social Security number (SSN)
Claim itemized or non-itemized deductions

How to claim the deduction

Include your Social Security number on the return.
File jointly if you’re married.

Reporting requirements

Employers and other payors must report qualified overtime compensation on IRS (or SSA) information returns.
Treasury and the IRS will provide transition relief for tax year 2025.

No Tax On Car loan interest

Overview of the new deduction

Effective 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle for personal use that meets other eligibility criteria. Lease payments do not qualify.
Maximum annual deduction is $10,000.
Phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers).

What counts as qualified interest

Interest must be paid on a loan that:

Originated after December 31, 2024
Was used to purchase a vehicle originally used by the taxpayer
Was secured by a lien on the vehicle
Was for a personal-use (nonbusiness) vehicle

If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction.

What counts as a qualified vehicle

A qualified vehicle is a car, minivan, van, SUV, pickup truck or motorcycle that:

Has a gross vehicle weight rating of less than 14,000 pounds
Underwent final assembly in the United States.

To verify final assembly, check one of these:

The vehicle label at the dealership
The vehicle identification number (VIN)
The National Highway Traffic Safety Administration, NHTSA VIN Decoder (verify vehicle assembly location)

Who qualifies

Available to both itemizing and non-itemizing taxpayers.
You must include the VIN on your return for any year you claim the deduction.

Reporting requirements

Lenders or other recipients of qualified interest must file information returns with the IRS and provide statements to taxpayers showing the total amount of interest received during the taxable year

Trump Accounts

Overview of Trump Accounts

Parents, guardians, or others can establish a Trump Account for an eligible child.
Trump Accounts cannot be funded before July 4, 2026.
The federal government will make a one-time $1,000 contribution for each eligible child’s account.
Authorized contributions from individuals and employers are allowed up to $5,000 per year.
Employers can contribute up to $2,500 per year toward an employee’s or dependent’s Trump Account without it counting as taxable income for the employee.
Funds must be invested in certain mutual funds or exchange-traded funds that track a U.S. stock index such as the S&P 500.

Withdrawal and use

Generally, money cannot be withdrawn before the year the child turns 18.
After that point, the account is treated like a traditional IRA with similar tax rules.

Standard deduction increases

Tax year 2026

$32,200 for married couples filing jointly
$16,100 for single filers and married individuals filing separately
$24,150 for heads of household

Tax year 2025

$31,500 for married couples filing jointly
$15,750 for single filers and married individuals filing separately
$23,625 for heads of household

Marginal rates for tax year 2026

37% for income over $640,600 (single) or $768,700 (married filing jointly)
35% for income over $256,225 (single) or $512,450 (married filing jointly)
32% for income over $201,775 (single) or $403,550 (married filing jointly)
24% for income over $105,700 (single) or $211,400 (married filing jointly)
22% for income over $50,400 (single) or $100,800 (married filing jointly)
12% for income over $12,400 (single) or $24,800 (married filing jointly)
10% for income up to $12,400 (single) or $24,800 (married filing jointly)

Employer-provided childcare credit expansion for tax year 2026

Maximum amount increases from $150,000 to $500,000
Maximum increase to $600,000 if employer is an eligible small business

Estate tax exclusion for tax year 2026

Basic exclusion amount is $15,000,000
Up from $13,990,000 for 2025 decedents

Adoption credit limits for tax year 2026

Maximum adoption credit is $17,670, which is higher than the $17,280 limit for 2025.
Up to $5,120 of this credit may be refundable.

Alternative minimum tax exemption amounts for tax year 2026

$90,100 for single filers (phased out at $500,000)
$140,200 for married couples filing jointly (phases out at $1,000,000)

Treasury, IRS issue guidance on the additional first year depreciation deduction amended as part of the One, Big, Beautiful Bill

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued Notice 2026-11 PDF that provides taxpayers with guidance on the permanent 100% additional first year depreciation deduction for eligible depreciable property acquired after Jan. 19, 2025, provided by the One, Big, Beautiful Bill. The notice also provides guidance on certain qualified sound recording productions that the OBBB added as property that may be eligible for the additional first year depreciation deduction.

Generally, when taxpayers acquire property for business use, they must depreciate it over several years based on various depreciation schedules.

The notice also provides interim guidance to taxpayers that they may generally rely on the existing additional first year depreciation deduction regulations. The notice provides rules for determining whether depreciable property is eligible for the additional first year depreciation deduction and for determining the amount of such deduction allowable under the OBBB. In general, the OBBB provides a permanent 100‑percent additional first year depreciation deduction for qualified property acquired, or specified plants that are planted or grafted, after Jan. 19, 2025.

Elections related to the additional first year depreciation deduction

The notice also provides interim guidance on elections taxpayers can make for certain property to be eligible for the additional first year depreciation deduction. Under the OBBB, taxpayers may elect:

To deduct 40-percent (60-percent for certain property having longer production periods or certain aircraft) instead of the 100-percent additional first year depreciation deduction for qualified property placed in service during the first tax year ending after Jan. 19, 2025,
To deduct additional first year depreciation for one or more specified plants,
To treat certain acquired or self-constructed components of larger self-constructed property as generally eligible for the additional first year depreciation deduction, and
Not to deduct the additional first year depreciation for a qualified sound recording production.

Sound recording productions added by the OBBB

In addition, the notice provides interim guidance for qualified sound recording productions. In general, a qualified sound recording production:

Is treated as acquired on the date principal recording commences,
Is considered placed in service at the time of initial release or broadcast, and
Qualifies for the additional first year depreciation deduction if the sound recording production commences in a taxable year ending after July 4, 2025.