One Big Beautiful bill (OB3) FAQ
note this information is a summary of some of the changes resulting from this bill passing. it does not include all changes.
deduction and credits are often subject to additional requirements.
please contact your tax advisor if your unsure if these apply to your situation.
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individual tax
No tax on tips and overtime.
A new deductions for qualified tips up to $25,000 per year. This is available to both W2 employees and independent contractors who receive tips in eligible occupations*.
The new deduction for no tax on over-time is up to $12,500 of over-time per year (up to $25,000 for joint filers). This is for overtime that is required under Section 7 of the Fair Labor Standards Act of 1938.
Both deductions start to phase out if your modified adjusted gross income is above $150,000/$300,000 single/married filing jointly.
For more information from the IRS website Click Here.
*We do not have a definition of eligible occupations from the IRS yet, it’s expected prior to October 2025.
No tax on car loan interest
Up to a $10,000 deduction paid on car loan interest for qualified vehicles. Vehicles must be for personal use, you must be the first owner (used vehicles do not qualify) and the loan must originated after December 31, 2024. This is available for both itemizing and non-itemizing taxpayers.
For more information from the IRS website Click Here.
deduction for seniors
Individuals who are age 65 or older may claim an additional deduction of $6,000 (Up to $12,000 if both spouses qualify). Must be 65 as of the last day of the tax year with the phaseout of this deduction starting if your modified adjusted gross income is $75,000/$150,000 single/joint filers.
increase state and local tax deduction (salt)
The amount you can deduct of state and local tax has increased from $10,000 to $40,000 for tax year 2025. This deduction is limited once your modified adjusted gross income reaches $500,000.
Increase of the child tax credit
Starting in 2025 the Child Tax Credit will increase to $2,200 from $2,000 per child with the refundable portion increasing to $1,700.
This credit as well as the refundable portion will be inflation-indexed moving forward starting in 2026 (increased each year based on inflation).
Mortgage insurance premiums
Starting in 2026 your mortgage insurance premiums (box 5 on your 1098) will be included as an itemized deduction for qualified mortgages up to $750,000.
changes to charitable contributions
This bill returned the above the line deduction for charitable deductions of up to $1,000/$2,000 for single/joint filers. This is available to both itemizing and non-itemizing filers.
For contributions in excess of the $1,000/$2,000 above the line deduction this bill add a “floor” of 0.5% of your modified adjusted gross income. This means that additional contributions will have to exceed 0.5% of your MAGI before they will be included in your itemized deductions (similar to how medical expense is calculated).
clean energy credits
This bill essentially removed most clean energy credits. Please refer to the IRS website to find out additional information for credits still available.
business tax
extension of qualified business income deduction
This bill extended the Qualified Business Income Deduction. It also adjusted some of the thresholds and limits for calculating the deduction starting in the 2026 tax year. It also created a new minimum deduction of $400 for taxpayers with at least $1,000 of qualified business income starting in the 2026 tax year.
100% bonus depreication
OB3 bring back 100% bonus depreciation for qualified business property. This applies to most tangible property with a life of 20 years or less.
For the 2025 tax year this applies to qualified business property purchased after January 19, 2025.
changes to research and experimental expenditures
This bill adjusts how a business can expense their R&E expenses. Taxpayers may fully deduct domestic R&E expenses they were paid or incurred instead of having to amortize those expenses over time.
1099 reporting changes
This bill restored the prior limits of receiving a 1099-K to $20,000 or 200 transactions.
It also increased the reporting threshold as to when you need to issue a 1099-MISC and NEC to $2,000 from $600. This limit will start to adjust based on inflation in the 2027 calendar year.
clean energy credits
This bill essentially removed most clean energy credits. Please refer to the IRS website to find out additional information for credits still available.