The One, Big, Beautiful Bill introduces major federal tax relief for millions of workers—especially those who earn income through tips and overtime. This legislation creates new deductions that directly benefit service workers, gig workers, veterans, and individuals in lower- to middle-income jobs, allowing many taxpayers to keep more of what they earn starting this filing season.

Key highlights include:

A new deduction for qualified tips for eligible workers in industries like hospitality, beauty, fitness, and the gig economy

A new deduction for qualified overtime pay, allowing workers to deduct the overtime premium portion of their earnings

Income-based phaseouts to target relief toward low- and middle-income taxpayers

Benefits available to both employees and self-employed individuals

These changes represent one of the most impactful shifts in worker-focused tax policy in years.

Read more to see who qualifies, how the deductions work, and how to take advantage this tax season.

2026 Tax Filing Season Overview

Internal Revenue Service announced that the 2026 tax filing season opens on January 26, 2026, with the deadline to file 2025 federal tax returns set for April 15, 2026. The IRS expects approximately 164 million individual returns, with most taxpayers filing electronically.

This filing season reflects several new tax law provisions under the One, Big, Beautiful Bill, which may impact deductions, credits, and refunds. Notable updates include a new Schedule 1-A for claiming recently enacted deductions (such as no tax on tips, overtime, certain car loan interest, and enhanced deductions for seniors), as well as system updates to support digital assets reporting and expanded online services.

Taxpayers are encouraged to use IRS.gov tools, including Individual Online Accounts, Where’s My Refund, IRS Free File, and Fillable Forms. The IRS is also transitioning away from paper refund checks, strongly encouraging direct deposit through a bank account.

Additional resources are available for military members, seniors, low-income taxpayers, and those seeking in-person assistance or help choosing a qualified tax preparer. Taxpayers should also remain vigilant against tax scams and identity theft during the filing season.

Below is a clear and easy-to-understand overview of the most important tax changes included in the One, Big, Beautiful Bill Act, effective beginning in 2025. Each section includes a link to official IRS guidance for clients who would like more detailed information.

1. New $6,000 Deduction for Seniors (65+)

Individuals 65+ can claim an additional $6,000 deduction ($12,000 for married couples).

Applies whether you itemize or take the standard deduction.

Begins in 2025 and runs through 2028.

Phases out for income over $75,000 (single) or $150,000 (married).

Must include the senior’s SSN and, if married, file jointly.

2. No Tax on Tips (Up to $25,000 Deductible)

Employees and self-employed individuals in tipping occupations may deduct up to $25,000 of qualified tips.

Tips must be voluntary and reported (W-2, 1099, or Form 4137).

Income phaseout begins at $150,000 (single) / $300,000 (married).

SSTB occupations (e.g., certain service industries) are not eligible.

IRS will provide transition relief in 2025 for taxpayers and employers.

3. No Tax on Overtime Pay

Individuals may deduct the portion of overtime pay above their regular rate (“the half” of time-and-a-half).

Maximum deduction: $12,500 (single) / $25,000 (married).

Income phaseout at $150,000 / $300,000.

Available for both itemizers and standard deduction filers.

Employers must report total overtime paid.

4. No Tax on Car Loan Interest (Up to $10,000)

New deduction for personal-use vehicles purchased with a loan after 12/31/2024.

Up to $10,000 of interest may be deducted.

Vehicle must be new, purchased for personal use, and assembled in the U.S.

Income limits: phases out at $100,000 / $200,000.

Must report the vehicle’s VIN when claiming the deduction.

Lenders have new IRS reporting requirements with 2025 transition relief.

5. Expiring Clean Vehicle Credits (Starting 9/30/2025)

New Clean Vehicle Credit (30D) ends for vehicles purchased after Sept. 30, 2025.

Used Clean Vehicle Credit (25E) also ends after that date.

Commercial Clean Vehicle Credit (45W) expires for vehicles acquired after Sept. 30, 2025.

6. Expiring Home Energy Credits (Starting 12/31/2025)

Energy Efficient Home Improvement Credit (25C) expires after Dec. 31, 2025.

Residential Clean Energy Credit (25D) also expires for expenses incurred after Dec. 31, 2025.

7. Employee Retention Credit (ERC) Limitations

The IRS has implemented limits on ERC claims filed after Jan 31, 2024 for Q3 and Q4 of 2021.