One Big Beautiful Bill Archives

Claiming Your One Big Beautiful Bill Tax Breaks

By Office Staff|2025-09-30T10:53:33-07:00September 30, 2025|Categories: Legislation|Tags: Auto Loan Interest, One Big Beautiful Bill, Overtime Pay, Tip Income|0 Comments

A wave of new federal income tax-saving opportunities is on the horizon, thanks to the One Big, Beautiful Bill (OBBB, H.R.1, Public Law No. 119-21). These provisions, which will be rolled out over the next four tax years (2025–2028), are envisioned by the current administration as welcome relief for select taxpayers, primarily in the form of the following three deductions:

Deduction for tip income (“no tax on tips”)
Deduction for overtime pay (“no tax on overtime”)
Deduction for interest on certain auto loans

In this SWC blog post, we take a deeper dive into these three tax breaks and explain what you need to do to fully take advantage of them, starting with no tax on tips.

Deduct Tip Income (Up to $25,000)

H.R.1 introduces an above-the-line deduction (up to $25,000) for cash or credit card tips earned in professions in which tipping is the norm. The Department of the Treasury and the Internal Revenue Service published this list of eligible sectors, covering occupations in:

Beverage and food service (bartenders, waitstaff, dishwashers, etc.)
Entertainment and events (gambling dealers, dancers, musicians, etc.)
Hospitality & guest services (concierges, desk clerks, housekeepers, etc.)
Home services (landscapers, plumbers, handymen, etc.)
Personal services (personal care and service workers, private event planners, wedding photographers and videographers, etc.)
Personal appearance and wellness (estheticians, masseuses, tattoo artists, etc.)
Recreation and instruction (golf caddies, piano teachers, ski instructors, etc.)
Transportation and delivery (valet parkers, pizza delivery drivers, furniture moves, rideshare drivers, etc.)

For more information, see Treasury, IRS issue guidance listing occupations where workers customarily and regularly receive tips under the One, Big, Beautiful Bill.

Note that this is $25,000 per return, not per taxpayer. So, if you’re married filing jointly (MFJ), and you collectively receive tip income more than $25,000, you can only deduct up to $25,000.

Be Careful: Though the phrase “no tax on tips” sounds like a full exemption, it is actually a deduction, not an income exclusion. You won’t owe federal income tax on the amount of tip income you deduct, but you are required to pay Social Security and Medicare taxes on that income. You may also be required to pay state and local taxes on that income.

Reporting is really important here: Your W‑2s, 1099s, or Form 4137 must clearly identify tip amounts and the profession that generated the tip income you received. And here’s something else you need to know: 2025 forms and withholding tables won’t be updated, but the IRS will issue transitional guidance for what “reasonable” reporting looks like.

If you’re self-employed in a profession in which tipping is the norm, you’re eligible for this tax break, too! However, we’re waiting for Internal Revenue Service (IRS) specifics on how to report tip income via Schedule C.

In any event, you need to be aware of these three limits: Continue reading… Continue reading… Continue reading…

What the Passage of the One Big Beautiful Bill Mean for You and Your Business

By Office Staff|2025-07-16T12:11:14-07:00July 16, 2025|Categories: Legislation|Tags: Bonus Depreciation, Child Tax Credits, One Big Beautiful Bill, Overtime Tax, Pass-Through Entity, SALT Deduction, Social Security Tax, Tax Credits, Tax on Tips, TCJA|1 Comment

On July 3, 2025, Congress passed H.R. 1, a sweeping piece of tax legislation known as the One Big Beautiful Bill Act (OBBB). The OBBB is a nearly 1,000-page tax package aimed at preserving and expanding key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and so much more.

This pro-growth bill prevents the expiration of certain tax breaks while adding a host of new tax relief measures, including “no tax on tips,” “no tax on overtime pay,” “no tax on car loan interest,” and “no tax on Social Security.” It also provides tax incentives to businesses that manufacture in the U.S. and hire more U.S. workers, and it rolls back many of the green energy credits that we’ve written about in previous blog posts.

This post summarizes the most important changes found in the new law, which was signed by the President on July 4, 2025, focusing on provisions that directly affect individual taxpayers (as compared to corporations). Understanding these updates is important, whether you’re a high net-worth individual or family member, an employee, a small-business owner or entrepreneur, a parent, or a retiree. Or maybe you just want to know how these tax code changes are likely to affect you and how you can maximize your tax savings legally.

Here’s what you need to know.

Individual Tax Rates and the Standard Deduction

The 2017 Tax Cuts and Jobs Act (TCJA) reduced most individual income tax rates. The 15 percent bracket dropped to 12 percent, the 25 percent bracket to 22 percent, the 28 percent bracket to 24 percent, the 33 percent bracket to 32 percent, and the top 39.6 percent bracket to 37 percent. The One Big Beautiful Bill Act (OBBB) locks in these rate structures permanently.

Tax Relief at a Cost? While tax relief is always welcome, according to the Congressional Budget Office (CBO), doing so will add $2.2 trillion to the federal deficit over the next decade.

The standard deduction, which was nearly doubled in 2017, is also made permanent by the OBBB and temporarily increased further for tax years 2025–2028:

$15,750 for single filers
$23,625 for heads of household
$31,500 for joint filers

This expansion reduces the number of itemizers and simplifies filing for most taxpayers. It is estimated to cost $1.4 trillion over 10 years, according to the CBO.

The Child Tax Credit

The 2017 Tax Cuts and Jobs Act (TCJA) doubled the Child Tax Credit from $1,000 to $2,000 per child. The OBBB makes this adjustment permanent, increasing it temporarily to $2,500 through 2028. Inflation adjustments begin in 2026. The $500 credit for non-child dependents also becomes permanent. These changes will cost an estimated $817 billion over 10 years, according to the CBO.

The Qualified Business Income (QBI) Deduction

To maintain parity between pass-through businesses and C corporations, the 2017 Tax Cuts and Jobs Act created a 20 percent deduction for qualified business income. The new law keeps this deduction and increases it to 23 percent starting in 2026. It also expands eligibility and adjusts phaseout thresholds to avoid income cliffs. Continue reading… Continue reading… Continue reading…

What That One Big, Beautiful Bill Act May Mean for You or Your Business

By Office Staff|2025-07-10T10:41:38-07:00July 1, 2025|Categories: Legislation, Tax Credits|Tags: Above-the-Line Deductions, Bonus Depreciation, Legislative Updates, OBBBA, One Big Beautiful Bill, Tax Credit, Tax Planning|0 Comments

Depending on how you voted in 2024 or which media outlets you follow, you might think the One Big, Beautiful Bill Act (OBBBA) is either a historic win or a major letdown. Since clients have been asking for our take, we want to share what we know and believe about the bill.

Passed by the U.S. House of Representatives on May 22, 2025, and passed this morning by the United States Senate, the bill includes 300-plus provisions, including one that seeks to extend the provisions of the 2017 Tax Cuts and Jobs Act, which are set to expire at the end of 2025. But there’s much more to it than that.

While changes are expected as the legislation moves back to the House of Representatives for another vote, many provisions will likely survive the legislative process. This summary covers the main individual and business tax provisions broken down into the following four sections:

New above-the-line deductions (tips, overtime pay, and vehicle loan interest)
Business depreciation and expensing provisions (to encourage new investments in production property and equipment)
Business interest expense limitation (to prevent excessive interest deductions that would reduce a business’s taxable income too aggressively)
Clean energy credit rollbacks (to reduce subsidies for clean energy technologies)

New Above-the-Line Deductions

President Trump’s campaign promises are reflected in three above-the-line deductions proposed in the OBBBA. (An above-the-line deduction is one that reduces the adjusted gross income [AGI] used to calculate how much federal income tax is owed. It does not affect the amount of Social Security and Medicare tax owed.)

Here are the three new above-the-line deductions proposed in the OBBBA:

A tax deduction for tip income (“no tax on tips”)
A tax deduction for overtime pay (“no tax on overtime”)
A tax deduction for interest paid on loans used to buy certain vehicles manufactured in the United States

Tax Deduction for Tip Income

The proposed “no tax on tips” deduction is for certain tips reported on W-2s and other tax forms. With one out of every 30 workers in the U.S. depending on tips to make ends meet, a tax deduction for tip income is an essential need for some.

Here are the requirements to qualify: Continue reading… Continue reading… Continue reading…