What’s New Under the “One Big Beautiful Bill Act”
Leer en español: Los nuevos cambios del “Gran y Hermoso Proyecto de Ley” →Update: Corrected the Child Tax Credit SSN rule, added the new-vehicle, U.S.-assembly and post-2024-loan rules for the car-loan interest deduction, and clarified that single filers also qualify for the senior deduction.
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Key tax changes for everyday taxpayers (2025 edition).
Higher standard deduction
- $31,500 for Married Filing Jointly (MFJ)
- $15,750 for single filers
More income is shielded from tax, with no itemizing required.
Child Tax Credit increased
- $2,200 per child
- Partially refundable
- Requirements: the taxpayer (or at least one spouse if filing jointly) needs a Social Security number valid for work, and each qualifying child needs an SSN.
More money back for qualifying families. See our Child Tax Credit guide for details.
New $6,000 senior deduction
- $6,000 per qualifying senior age 65 or older (2025–2028)
- Phaseout: begins at $75,000 (single) / $150,000 (MFJ)
- Requirements: if married, you must file jointly (single filers qualify too); valid SSNs required
Direct relief for older adults and caregivers.
Overtime pay deduction
- Deduct up to $12,500 (single) / $25,000 (MFJ)
- Phaseout: starts at $150,000 / $300,000 of modified adjusted gross income (MAGI)
- Requirements: must be FLSA-qualified overtime (hours worked beyond 40 per week), and a valid Social Security number must be reported
- Effective: 2025–2028
Helps hourly employees reduce their taxable income.
Tip income deduction
- Deduct up to $25,000 per year
- Phaseout: same thresholds as overtime
- Requirements: must work in an occupation that customarily received tips before 2025; only voluntary, documented tips qualify; excludes specified service trades or businesses (SSTBs) like law, consulting and finance
- Effective: 2025–2028
Provides relief for restaurant and hospitality workers.
Car loan interest deduction
- Deduct up to $10,000 per year in interest (2025–2028)
- Phaseout: begins at $100,000 (single) / $200,000 (MFJ)
- Applies only to new vehicles (the original use must start with you) whose final assembly was in the United States, bought with a loan taken out after December 31, 2024
- Must be for personal use, and the vehicle’s VIN must be reported on your return
- Excluded: used, fleet, leased or salvage-title vehicles
A first-time tax break for buyers who finance a qualifying new car.
Mortgage interest deduction cap made permanent
The deduction applies to mortgages up to $750,000, which keeps this benefit available to many homeowners.
Trump Accounts for kids (new savings tool)
- $1,000 federal deposit for eligible children born 2025–2028
- Up to $5,000 per year in contributions (indexed for inflation)
- Requirements: strict SSN rules; qualified uses only (such as education, a home purchase or starting a business); penalties apply for early withdrawal or misuse
Helps families save long-term for their child’s future.
| Change (2025) | Amount | Years |
|---|---|---|
| Standard deduction (MFJ / single) | $31,500 / $15,750 | 2025 on |
| Child Tax Credit | $2,200 per child | 2025 on |
| Senior deduction | $6,000 per senior | 2025–2028 |
| Overtime deduction (single / MFJ) | $12,500 / $25,000 | 2025–2028 |
| Tip deduction | $25,000 | 2025–2028 |
| Car-loan interest deduction | $10,000 | 2025–2028 |
Need help applying these updates?
Santana & Associates is here to guide you, from IRS audit representation to tax planning and resolution. Based in Houston, serving all of Texas.
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This article is general information for the tax year shown and is not tax advice for your situation. Tax rules change. Contact Santana & Associates before acting on it.