Trump’s Tax Changes: How the One Big Beautiful Bill Affects You

As you follow the news about Trump’s One Big Beautiful Bill Act (OBBBA) tax changes, you might be wondering: Are tips and overtime tax-free now? How much is the child tax credit increase?

And most importantly, how do the new tax laws impact your refund?

The Big Beautiful Bill changes everything from overtime pay and tips, to deductions for parents, homeowners, and even seniors. My summary below highlights how OBBBA changes affect your tax return filing.

One Big Beautiful Bill Explained

On July 4, President Trump signed the One Big Beautiful Bill Act, a comprehensive 870-page law approved by Congress earlier that week. The bill impacts nearly every sector of the U.S. economy and extends many taxpayer-friendly provisions from the Tax Cuts and Jobs Act (TCJA).

If you’re trying to make sense of your annual tax return, the Big Beautiful Bill changes and extensions to the Tax Cuts and Jobs Act will affect you more than you think.

FAQs – One Big Beautiful Bill Tax Changes

Here are some of the top questions we’re getting, along with the answers.

What key provisions passed under the One Big Beautiful Bill?

• Raises the state and local tax (SALT) deduction cap to $40,000 for individuals earning up to $500,000.
• Introduces a qualified tip income deduction.
• Offers a qualified overtime pay deduction for certain workers.
• Includes a deduction for auto loan interest on certain vehicles.
• Expands the Child Tax Credit.
• Adds an enhanced deduction for seniors.
• Repeals energy-efficient credits (for EVs, hybrids, charging equipment, and home improvements) starting in 2025.
• Permanently extends the 20% deduction for qualified business income (QBI).

When do the new tax laws go into effect?

• Most provisions take effect in tax year 2025 (filed in 2026).
• Some provisions begin in tax year 2026.
• A handful apply retroactively to tax year 2024.
• ExpressTaxPros reflects these changes in its tools and services.

What passed from the Tax Cuts and Jobs Act (TCJA) and what does that mean for my taxes?

• The bill permanently extends several TCJA provisions:
  • Lower individual tax rate brackets (10% up to 37%)
  • Nearly doubled standard deduction
  • Expanded Child Tax Credit
  • Elimination of personal and dependent exemptions, and miscellaneous itemized deductions such as unreimbursed employee expenses
• For those not qualifying for newer benefits, tax outcomes may mirror previous years.
• Homeowners paying property, state, or sales taxes may benefit significantly from the increased SALT cap (up from $10,000 to $40,000).

What is the new tax law for no taxes on tips?

• Introduces a temporary deduction for tip income of up to $25,000, applicable for tax years 2025 through 2028.
• Available regardless of whether you itemize.
• The deduction phases out for incomes above $150,000.
• Example: if your tips are $5,000 and you’re in the 12% tax bracket, your savings could be $600.

What is the new tax law for no tax on overtime?

• Introduces a deduction for qualified overtime pay up to $12,500, available for 2025 through 2028.
• Phases out above $150,000 income.
• Benefits roles like police officers, firefighters, nurses, retail workers.
• Example: $12,500 in overtime at a 22% rate equals $2,750 in savings.

Are there any additional benefits for seniors under the new law?

• Enhanced deduction up to $6,000 for individuals 65 and older for tax years 2025 through 2028.
• Phases out at incomes over $75,000 (or $150,000 if married filing jointly).

How do I get a deduction if I pay a car note?

• New temporary deduction allowing up to $10,000 in auto loan interest annually.
• Vehicle must be for personal use and assembled in the USA.
• Phases out at individual incomes over $100,000 (or $200,000 for married filing jointly).

What is the new law for parents?

• The Child Tax Credit increases permanently to $2,200 per child under 17 starting in tax year 2025, with annual inflation adjustments.
• Requires valid Social Security numbers for children and at least one spouse (for joint filers) to claim.

What has changed for homeowners who pay property taxes?

• The SALT deduction cap increases to $40,000 in 2025.
• In 2026, the cap adjusts upward to $40,400, increasing by 1% annually through 2029.
• Phases out for incomes above $500,000 ($250,000 for married filing separately).

I made energy efficient improvements to my home. Can I still get a credit?

• Energy-efficient home improvement credits end for property placed in service after 2025.
• Improvements made in 2025 may still qualify—but this is the final year for the credit.

I purchased an electric vehicle, can I still get a credit?

• Clean vehicle credit is eliminated for EVs purchased after September 30, 2025.
• EVs bought before that date may qualify for up to $7,500 (new) or $4,000 (used).

Will personal and dependent exemptions be reinstated?

• No—personal and dependent exemptions are now permanently eliminated.

I work from home. Can I claim unreimbursed employee expenses again?

• No—miscellaneous itemized deductions (like unreimbursed employee expenses) remain permanently eliminated.
• However, self-employed individuals can still deduct home office expenses.

I’m self-employed. What are the new tax benefits that I can claim?

• The 20% Qualified Business Income (QBI) deduction is now permanently extended.
• Phase-in thresholds increased to $75,000 (or $150,000 for married filing jointly).
• 100% bonus depreciation for business equipment placed into service after January 19, 2025 is also now permanent.

The new OBBBA tax laws can be complex, but we’re here to help. ExpressTaxPro will guide you through the filing process. Schedule an appointment or contact us today!

⚡Have questions about how the One Big Beautiful Bill tax changes affect your tax refund? Leave a comment below!