A major tax bill was recently passed by the Senate and signed into law—officially called the One Big Beautiful Bill (OBBB). While the name may sound grand, the real question for most individuals and business owners is simple: What’s actually changing and how does it affect me?

The Breakdown

Here’s a breakdown of the key changes in everyday terms, and what you should think about as a taxpayer, parent, retiree, or business owner.

For Individuals and Families

1. Bigger Child Tax Credit

Good news for parents: the child tax credit is going up from $2,000 to $2,200 per child. Even better, it’s now tied to inflation, so it could increase a bit every year.

What to do: Make sure you’re claiming the credit correctly. If you’ve had a child recently or your income has changed, now’s the time to update your tax withholdings or consult a tax pro.

2. No Federal Tax on Tips and Overtime (Up to a Limit)

One of the headline changes is a new deduction for tip and overtime income. If you earn tips (like restaurant workers) or work overtime, you can deduct up to $25,000 in tips or $12,500–$25,000 in overtime (depending on your filing status).

But it’s not unlimited: this benefit starts phasing out at $150,000 in income for single filers and $300,000 for married couples.

What to do: Keep records of your tip and overtime income. This deduction only applies through 2028, so take advantage of it while it lasts.

3. Bigger Deduction for Seniors

If you’re 65 or older, you’ll now qualify for an extra $6,000 standard deduction. However, this new benefit starts phasing out once your income hits $75,000 (single) or $150,000 (married).

What to do: Seniors should review their retirement income strategy and filing status to see if they qualify for this benefit.

4. Auto Loan Interest Deduction

If you buy a car assembled in the U.S., you can now deduct up to $10,000 of the interest paid on your car loan. This only applies to interest and doesn’t count for lease payments or foreign-made vehicles.

What to do: Considering a new car? Ask the dealer where it was assembled and save those loan statements.

5. Higher SALT Deduction (Temporarily)

The deduction for state and local taxes (SALT) was capped at $10,000—but now it’s going up to $40,000 for people making under $500,000. This increase will only last five years.

What to do: If you itemize your deductions, this could make a big difference. Ask your accountant whether it makes sense to pay property taxes or other local taxes early to take advantage of this bump.

For Business Owners and Investors

1. Section 199A Deduction Increased

Small business owners and self-employed individuals can now deduct 23% (up from 20%) of their qualified business income. This applies to pass-through entities like partnerships, LLCs, and S corps.

What to do: Talk to your accountant about whether your current business setup is maximizing this deduction. A small tweak in how you structure your business could save you money.

2. 1099 Threshold Raised

You no longer have to issue a 1099-MISC to contractors unless you pay them $2,000 or more (up from $600). This means less paperwork for small businesses.

What to do: Update your internal accounting systems and vendor tracking to reflect the new threshold.

3. Digital Payment Platforms Stay at $20K/200 Transactions

The IRS was set to drop the reporting threshold for third-party payment platforms (like Venmo, PayPal, etc.) to just $600. That’s now been reversed. The old rule—$20,000 and 200 transactions—still applies.

What to do: If you run a side hustle or get paid through apps, this keeps things more manageable—but you should still track all your income.

4. Changes to Business Interest Deductions

The bill also tweaks how businesses calculate interest deductions on their loans. Under the new rules, interest is calculated before it’s capitalized, which could slightly increase tax liability for some businesses.

What to do: Review your debt structure with your accountant or CFO. These changes may not be dramatic but could affect your long-term financing strategy.

5. Slight Increase in BEAT

The Base Erosion and Anti-Abuse Tax (BEAT), which affects large multinational companies, is increasing slightly—from 10% to 10.5%.

What to do: This mostly affects companies with international operations. If that’s you, it’s time to revisit your tax structure.

What’s Next?

The OBBBA is a big piece of legislation with major implications across the board. It aims to cut taxes for working families and simplify rules for businesses. However, many provisions expire after 2028, and some may face legal or political challenges.

• Individuals should take advantage of new deductions where possible—especially those who earn tips, work overtime, or have kids.
• Seniors should check their eligibility for the new standard deduction.
• Business owners need to revisit reporting thresholds, interest deductions, and their entity structure.
• Everyone should start planning now for these changes before tax season hits.

If you’re unsure how these new rules affect you, I’m here to help. Reach out to schedule a tax planning session tailored to your situation.