One Big Beautiful Bill Act (OBBBA): Key Tax Changes for 2025–2028
The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025 and begins affecting federal taxes starting in tax year 2025 (returns filed in 2026). This law includes new and updated deductions, especially for working Americans and senior, plus other changes that may impact your return. Below are the biggest updates we’re getting questions about this tax season.
Important: Many provisions have eligibility rules, income limits, and documentation requirements. LWS can help you confirm what applies and help file it correctly.
-
What changed: For 2025–2028, eligible taxpayers may claim a deduction for qualified tips (voluntary tips received from customers).
Limits: Max deduction $25,000/year, with phaseouts starting at $150,000 MAGI ($300,000 joint).
What you’ll need: W-2/1099 details and/or tip records.
LWS helps by: confirming eligibility, documenting tips properly, and claiming the deduction the right way. -
What changed: For 2025–2028, eligible taxpayers may deduct the overtime premium portion—the amount paid above your regular rate (example: the “half” portion of time-and-a-half).
Limits: Max deduction $12,500/year ($25,000 joint), with phaseouts starting at $150,000 MAGI ($300,000 joint).
What you’ll need: Paystubs/W-2 support (2025 transition guidance applies).
LWS helps by: calculating the deductible portion correctly and making sure reporting matches the law. -
What changed: For 2025–2028, eligible taxpayers may deduct interest paid on a loan used to purchase a qualified vehicle for personal use. Leases do not qualify.
Limits: Max deduction $10,000/year, with phaseouts starting at $100,000 MAGI ($200,000 joint).
Basic requirements (high level):loan originated after 12/31/2024
vehicle is new to you (original use starts with the taxpayer)
vehicle is for personal (nonbusiness) use
vehicle has final assembly in the U.S.
you generally must include the VIN on the return when claiming the deduction
LWS helps by: confirming whether your loan/vehicle qualifies and ensuring the deduction is properly reported.
-
What changed: For 2025–2028, individuals age 65+ may claim an additional $6,000 deduction (in addition to existing senior standard deduction rules).
Limits: Phaseout begins at $75,000 MAGI ($150,000 joint). -
What changed: OBBBA includes inflation adjustments that affect the standard deduction amounts.
IRS-listed standard deduction amounts:Tax year 2025: $31,500 MFJ; $15,750 Single/MFS; $23,625 HOH
Tax year 2026: $32,200 MFJ; $16,100 Single/MFS; $24,150 HOH
LWS helps by: confirming whether itemizing vs. standard makes sense under the new numbers.
Have questions about OBBBA and your taxes?
LWS can help you figure out what applies (and what doesn’t), what documents you need, and how to claim eligible deductions correctly, whether you’re an employee, retiree, or business owner.