WASHINGTON, D.C. (TIP): The passing of the One Big Beautiful Bill brings significant changes to the tax code and beyond. The bill permanently extends certain provisions from the Tax Cuts and Jobs Act (TCJA) that were set to expire, including an increased state and local tax (SALT) deduction cap, and introduces changes to taxes on tips and overtime for certain workers. Impacts to energy credits, Medicaid, the debt ceiling, and student loans are also included.
Key things you need to know:
Most of the new tax laws under the One Big, Beautiful Bill don’t kick in until tax year 2025 (i.e. the taxes you file in 2026) and some for tax year 2026. A few uncommon provisions are retroactive to tax year 2024, and TurboTax will be up-to-date with those when it’s time for you to file.
TurboTax will be updated in accordance with the new tax laws and IRS guidance when the new tax laws take effect.
As you follow the news about the One Big Beautiful Bill, you might be wondering about the key tax provisions that have passed. Questions like: Are tips and overtime now tax-free? What’s happening with SALT? And most importantly, how do the new tax laws impact your financial situation?
Here are some of the top questions we’re getting, along with the answers.
What key provisions passed under the One Big Beautiful Bill?
Key provisions of the One Big Beautiful Bill include:
- Raises SALT cap to $40,000 if you earn up to $500,000
- Above-the-line deduction for tip income
- Above-the-line deduction for overtime pay for certain workers
- Above-the-line deduction for auto loan interest for certain vehicles
- Child Tax Credit expansion
- Enhanced deduction for seniors
- Repeal of energy efficient credits for EVs, hybrids, charging, and energy efficient home improvements beginning in 2025
- Permanently extends the deduction for qualified business income at 20%
- Reforms Medicaid
- Reforms Pell Grants and student loans
When do the new tax laws go into effect?
The majority of the tax provisions will go in effect in tax year 2025 (i.e. the taxes you file in 2026) and some for tax year 2026. A few uncommon provisions are retroactive to tax year 2024. TurboTax will be up-to-date in accordance with these provisions, including our done for you experiences, tax experts, and tools.
What passed from the Tax Cuts and Jobs Act (TCJA) and what does that mean for my taxes?
The One Big Beautiful Bill permanently extends certain tax provisions from the 2017 Tax Cuts and Jobs Act, including:
- Lower individual tax rates (10%, 12%, 22%, 24%, 32%, 35%, 37%)
- Nearly doubled standard deduction
- Child Tax Credit expansion
- Elimination of personal and dependent exemptions, and itemized deductions for miscellaneous expenses like unreimbursed employee expenses
If you don’t qualify for new tax benefits, your tax outcome may look similar to last year’s since many provisions under the TCJA are being made permanent. However, if you’re a homeowner who paid property taxes and state income or sales tax, you may see tax savings due to the increased SALT deduction cap from $10,000 to $40,000, allowing you to claim a larger deduction.
What is the new tax law for no taxes on tips?
In previous years, including tax year 2024, cash and non-cash tips were considered income subject to federal taxes, Social Security, and Medicare taxes, and were required to be reported to your employer if they exceeded $20 a month. The new provision creates a temporary above-the-line deduction for tips up to $25,000 for tax years 2025 through 2028. This deduction is available regardless of whether you itemize your deductions or not.
If you earn tips as a waitress, barista, or in another tipped occupation and your income is below $150,000, you may be eligible to claim this deduction. However, the tax benefit begins to phase out for income above $150,000. It’s essential to understand that this deduction doesn’t directly reduce your taxes dollar-for-dollar, and your actual tax savings will depend on your tax rate.
For example, if you earned $5,000 in tips and are in the 12% tax bracket, your tax savings would be $600 ($5,000 x 12%).
What is the new tax law for no tax on overtime?
Like the new tax provision for tips, the new provision for overtime introduces an above-the-line deduction for qualified overtime income up to $12,500 for tax years 2025 through 2028 and phases out for income above $150,000.
Certain workers, such as police officers, firefighters, nurses, and retail workers, may benefit from this deduction. However, while this deduction can lower your taxable income, it is not a dollar-for-dollar reduction of your taxes and the actual tax savings will depend on your tax rate.
For example, if you’re a nurse with $12,500 in qualified overtime and 22% tax rate, then your tax savings would be $2,750 ($12,500 X 22%).
Are there any additional benefits for seniors under the new law?
Yes, there’s an enhanced deduction for seniors up to $6,000 for individuals over 65 for tax years 2025 through 2028. The deduction phases out at $75,000 for single filers and at $150,000 if you’re married filing jointly.
How do I get a deduction if I pay a car note?
A new temporary tax deduction allows you to deduct up to $10,000 in car loan interest per year for qualified auto loans. To qualify, the vehicle must be for personal use and assembled in the United States. This deduction phases out for single filers with incomes above $100,000 and married couples with incomes above $200,000.
What is the new law for parents?
Starting in tax year 2025, the Child Tax Credit will permanently increase to $2,200 per child under 17, with annual adjustments for inflation every year. To claim this credit, both taxpayers and children must now have a valid Social Security number.
What has changed for homeowners who pay property taxes?
A significant change relates to the state and local tax (SALT) deduction including local income, sales, and property taxes. Previously, the TCJA capped SALT at $10,000, set to expire in 2025. The new bill increases this cap to $40,000, effective from tax year 2025 through 2029. The deduction begins to phase out for single and married filing joint filers earning more than $500,000 and married couples filing separately earning more than $250,000.
This change benefits filers in states with high state and property taxes, allowing them to deduct more of their related expenses.
I made energy efficient improvements to my home. Can I still get a credit?
Energy efficient credits for home improvements under the Inflation Reduction Act will end for property placed in service after 2025. You can still claim these credits for improvements made in 2025 on your 2025 taxes (i.e. the ones you file in 2026), but this will be the last year they’re available.
I purchased an electric vehicle; can I still get a credit?
The new bill eliminates the clean vehicle credit for electric vehicles purchased after September 30, 2025. If you bought an electric vehicle before this date, you may be eligible for a clean vehicle credit up to $7,500 for a new EV or $4,000 for a used EV.
Will personal and dependent exemptions be reinstated?
No, personal and dependent exemptions are permanently eliminated. Although they were set to return in 2026 if the TCJA expired, the new bill makes the elimination permanent.
I work from home. Can I claim unreimbursed employee expenses again?
The TCJA temporarily eliminated miscellaneous itemized deductions, including unreimbursed employee expenses, from 2018 to 2025, and this elimination is now permanent. However, if you’re self-employed, you can still deduct expenses related to your home office.
I’m self-employed. What are the new tax benefits that I can claim?
If you’re self-employed or a business owner has a partnership or S-corp, you may be eligible for two significant tax deductions.
First, the 20% Qualified Business Income Deduction allows you to deduct up to 20% of your qualified business income. The new tax bill permanently extends this 20% deduction and increases the phase in ranges to $75,000 single and $150,000 married filing jointly.
Second, if you purchased equipment for your business, the new tax law also permanently allows you to write off 100% of your expenses for purchases like business equipment in the year you bought them.
Navigating the new tax laws can be complex, but we’re here to help you get the best outcome for your taxes. TurboTax will be up-to-date with the latest changes and guide your through the filing process, whether you want to do your taxes yourself or have a TurboTax Live expert do them for you.
(Lisa has over 20 years of experience in tax preparation. Her success is attributed to being able to interpret tax laws and help clients better understand them. She has held positions as a public auditor, controller, and operations manager. Lisa has appeared on the Steve Harvey Show, the Ellen Show, and major news broadcast to break down tax laws and help taxpayers understand what tax laws mean to them. For Lisa, getting timely and accurate information out to taxpayers to help them keep more of their money is paramount. More from Lisa Greene-Lewis)
(Source: Turbo Tax)
I enjoy the efforts you have put in this, regards for all the great posts.
Learned something new today!. Could use a bit more detail, but overall solid..
Some truly fantastic information, Sword lily I discovered this.
Very interesting subject , thanks for putting up.
Great V I should definitely pronounce, impressed with your web site. I had no trouble navigating through all tabs as well as related info ended up being truly simple to do to access. I recently found what I hoped for before you know it in the least. Quite unusual. Is likely to appreciate it for those who add forums or anything, web site theme . a tones way for your customer to communicate. Excellent task..
I’m really inspired along with your writing skills as well as with the layout for your weblog. Is that this a paid theme or did you customize it yourself? Either way stay up the nice high quality writing, it is uncommon to look a nice blog like this one today..
Very interesting details you have observed, thankyou for posting. “Never call an accountant a credit to his profession a good accountant is a debit to his profession.” by Charles J. C. Lyall.
We are a group of volunteers and starting a new scheme in our community. Your website offered us with valuable info to work on. You’ve done a formidable job and our entire community will be grateful to you.
Hola! I’ve been reading your weblog for a while now and finally got the bravery to go ahead and give you a shout out from Kingwood Texas! Just wanted to mention keep up the great work!
I’ve been exploring for a bit for any high-quality articles or weblog posts in this kind of house . Exploring in Yahoo I eventually stumbled upon this site. Studying this information So i am glad to exhibit that I’ve a very just right uncanny feeling I found out exactly what I needed. I most definitely will make certain to don’t overlook this website and provides it a glance on a relentless basis.
I have been browsing on-line greater than three hours lately, yet I never discovered any fascinating article like yours. It is lovely value sufficient for me. In my view, if all website owners and bloggers made good content material as you probably did, the net will likely be a lot more helpful than ever before.
Today, I went to the beach front with my kids. I found a sea shell and gave it to my 4 year old daughter and said “You can hear the ocean if you put this to your ear.” She put the shell to her ear and screamed. There was a hermit crab inside and it pinched her ear. She never wants to go back! LoL I know this is totally off topic but I had to tell someone!
Good write-up, I’m regular visitor of one’s site, maintain up the excellent operate, and It’s going to be a regular visitor for a long time.
As I website owner I think the content material here is rattling great, regards for your efforts.
I conceive other website owners should take this website as an model, very clean and superb user genial layout.
The very crux of your writing while appearing agreeable in the beginning, did not work properly with me after some time. Somewhere throughout the paragraphs you were able to make me a believer unfortunately just for a while. I nevertheless have a problem with your jumps in logic and you would do well to help fill in all those gaps. When you can accomplish that, I would surely end up being amazed.
Thank you for another excellent post. Where else could anyone get that type of info in such a perfect way of writing? I have a presentation next week, and I am on the look for such info.
I do agree with all of the ideas you’ve presented in your post. They’re very convincing and will certainly work. Still, the posts are very short for novices. Could you please extend them a little from next time? Thanks for the post.
It?¦s actually a nice and helpful piece of info. I am satisfied that you shared this helpful info with us. Please keep us informed like this. Thank you for sharing.
I reckon something truly special in this website.
Fantastic website. Lots of useful information here. I am sending it to a few buddies ans additionally sharing in delicious. And naturally, thanks on your sweat!
Hi, just required you to know I he added your site to my Google bookmarks due to your layout. But seriously, I believe your internet site has 1 in the freshest theme I??ve came across. It extremely helps make reading your blog significantly easier.
Hmm is anyone else experiencing problems with the images on this blog loading? I’m trying to determine if its a problem on my end or if it’s the blog. Any responses would be greatly appreciated.
Hello, Neat post. There’s an issue together with your website in web explorer, would check thisK IE still is the market leader and a big portion of people will miss your magnificent writing because of this problem.
Very interesting points you have mentioned, appreciate it for putting up.
Simply wanna input on few general things, The website style is perfect, the content material is rattling great : D.
This is the right blog for anyone who wants to find out about this topic. You realize so much its almost hard to argue with you (not that I actually would want…HaHa). You definitely put a new spin on a topic thats been written about for years. Great stuff, just great!
Exactly what I was searching for, regards for posting.
It?¦s truly a nice and helpful piece of info. I?¦m happy that you simply shared this helpful info with us. Please keep us up to date like this. Thank you for sharing.
Well I sincerely enjoyed reading it. This information offered by you is very helpful for correct planning.
hey there and thank you in your information – I have certainly picked up something new from proper here. I did on the other hand expertise some technical issues the usage of this site, since I experienced to reload the website lots of times prior to I could get it to load properly. I were wondering if your web host is OK? No longer that I’m complaining, however slow loading circumstances instances will sometimes impact your placement in google and could damage your high-quality score if ads and ***********|advertising|advertising|advertising and *********** with Adwords. Well I am adding this RSS to my email and can glance out for much more of your respective interesting content. Ensure that you replace this once more very soon..
Hello! I could have sworn I’ve been to this blog before but after browsing through some of the post I realized it’s new to me. Anyways, I’m definitely happy I found it and I’ll be book-marking and checking back frequently!
You should take part in a contest for one of the best blogs on the web. I will recommend this site!
Having read this I thought it was very informative. I appreciate you taking the time and effort to put this article together. I once again find myself spending way to much time both reading and commenting. But so what, it was still worth it!
After all, what a great site and informative posts, I will upload inbound link – bookmark this web site? Regards, Reader.
Does your blog have a contact page? I’m having problems locating it but, I’d like to shoot you an e-mail. I’ve got some creative ideas for your blog you might be interested in hearing. Either way, great blog and I look forward to seeing it expand over time.
Hello! Would you mind if I share your blog with my myspace group? There’s a lot of folks that I think would really appreciate your content. Please let me know. Thank you
At this time it looks like BlogEngine is the preferred blogging platform out there right now. (from what I’ve read) Is that what you’re using on your blog?
Nice post. I learn something more challenging on different blogs everyday. It will always be stimulating to read content from other writers and practice a little something from their store. I’d prefer to use some with the content on my blog whether you don’t mind. Natually I’ll give you a link on your web blog. Thanks for sharing.
Have you ever considered about adding a little bit more than just your articles? I mean, what you say is fundamental and all. But just imagine if you added some great visuals or video clips to give your posts more, “pop”! Your content is excellent but with pics and clips, this blog could definitely be one of the greatest in its niche. Excellent blog!
Hello, I think your blog might be having browser compatibility issues. When I look at your blog site in Opera, it looks fine but when opening in Internet Explorer, it has some overlapping. I just wanted to give you a quick heads up! Other then that, great blog!
Hi there, i read your blog occasionally and i own a similar one and i was just curious if you get a lot of spam remarks? If so how do you protect against it, any plugin or anything you can advise? I get so much lately it’s driving me insane so any help is very much appreciated.
you have a great blog here! would you like to make some invite posts on my blog?
Hi there! I’m at work surfing around your blog from my new iphone! Just wanted to say I love reading your blog and look forward to all your posts! Keep up the superb work!
Hi, just required you to know I he added your site to my Google bookmarks due to your layout. But seriously, I believe your internet site has 1 in the freshest theme I??ve came across. It extremely helps make reading your blog significantly easier.
We absolutely love your blog and find almost all of your post’s to be just what I’m looking for. Would you offer guest writers to write content in your case? I wouldn’t mind publishing a post or elaborating on a number of the subjects you write with regards to here. Again, awesome weblog!