Alright, let’s talk about the One Big Beautiful Bill that was just passed into law back on July 4th. Which, honestly, might be the first time government politicians worked on that day since 1776.
Sorry to any politicians that are reading this…I just couldn’t help but make that joke.
First off, yes—that’s the actual name. And no, I didn’t make it up. Love him or hate him, you can’t deny that President Trump has no issue making otherwise mundane things a little more memorable. But setting the title aside, this new law includes some real tax changes that could impact a lot of people—especially retirees, families, and people who work for tips or hourly pay.
Let’s break it down.
If You’re on Social Security
There’s a new rule that says if you’re 65 or older and your income is under $75,000 (or $150,000 for couples), you get an extra tax deduction—$6,000 per person.
What does that mean? In simple terms, it means you might not have to pay federal income tax on your Social Security anymore, and even if you do have to pay taxes on a portion of it, you likely won’t feel it as much. That’s a big deal.
This isn’t quite the blanket “no tax on Social Security” that it may have seemed like, but it’s definitely a big plus for retirees.
Also, don’t get too cozy—this only lasts through 2028. So if this helps you, enjoy it while it’s here… but don’t build your whole plan around it forever.
If You Work for Tips, Overtime, or Took Out a Car Loan
There are a few new tax breaks here, too. For the next few years (2025 to 2028), you might be able to:
- Deduct up to $25,000 in tip income. Again, not quite the “no tax on tips” but for many people, it might as well be.
- Deduct up to $12,500 in overtime pay ($25,000 for joint filers). From what I read, this looks like it only applies to overtime pay above and beyond your normal pay. Think the “half” of “time and a half”. Looks like that may be what you get the break on. Again, not an across the board benefit, but very beneficial for certain people.
- Deduct up to $10,000 in car loan interest (but only if the car is new, made in the US, and meets a few other qualifications)
Basically, if you hustle hard and/or recently bought a car, you might see a little more money stay in your pocket come tax time.
If You’ve Got Kids
The Child Tax Credit is going up—slightly. It’ll increase from $2,000 to $2,200 per child and will adjust with inflation after that.
It’s not going to change your life, but hey—an extra $200 per kid? That might just fund our diaper budget for the year…hopefully overfund if we can get our kids fully potty trained.
New Win for Everyday Givers
This part’s pretty cool: starting in 2026, you’ll be able to write off up to $2,000 in charitable giving even if you don’t itemize your taxes.
So if you give to your church, a nonprofit, or any qualified charity—you could get a tax break without needing a complicated tax return.
SALT Deduction Cap
The cap on how much State And Local Tax (SALT) you can deduct jumped from $10,000 to $40,000. This mostly helps people who pay high property taxes or live in states with steep income tax.
If that’s not you, feel free to ignore this section. If it is—nice little bonus.
Okay… So What Should You Do?
Here’s what we’d recommend:
- If you’re retired or close to it, double check whether this Social Security change applies to you. You might be able to lower your tax bill just by adjusting how your income is structured.
- If you’re working overtime or for tips, these new deductions could be a win—but only for a few years. Take advantage while they last.
- If you give to charity, you’ve now got one more reason to keep doing it. That deduction is coming soon.
- If none of this makes sense to you, don’t stress about it. There are over 70,000 pages in the tax code. Nobody knows the entire thing. But we’ll be happy to walk you through what we can.
Bottom line? This new law brings some short-term tax relief for a lot of people. But don’t assume it’s permanent. Like most things in Washington, this could change again in a few years.
Until then, a little bit of planning now can go a long way.
