Below is a clear, simple overview of the most important tax changes included in the One, Big, Beautiful Bill Act, effective beginning in 2025. Each section links out to detailed IRS guidance if clients want to learn more.

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.