What the Big Beautiful Bill Means for Your Taxes in 2025

Congress recently passed the Big Beautiful Bill (BBB) ⁱ— a sweeping tax reform designed to simplify, modernize, and strengthen the U.S. tax system. Lawmakers say their goal is to reduce the administrative burden on taxpayers, encourage economic growth, and maintain fiscal responsibility.

Here’s a quick look at the most impactful changes and what they could mean for you. (The first five provisions apply to tax years 2025–2028.)

1. What’s Changing for Tipped Workers?

If you work in the service industry, tips often make up a big part of your income. Under the BBB, you can deduct up to $25,000 in qualified tips — even if you don’t itemize your deductions. The deduction begins to phase out once AGI exceeds $150,000 ($300,000 for joint filers).

2. Can You Deduct Overtime Pay?

Yes — for the first time, the “half” portion of your time-and-a-half overtime pay may be deducted. The maximum deduction is $12,500 for single filers and $25,000 for joint filers each year.

3. Is Car Loan Interest Now Deductible?

Yes, if it meets certain conditions. You can deduct up to $10,000 of interest paid on a personal-use vehicle loan originated after December 31, 2024, as long as the vehicle’s final assembly occurred in the U.S. The deduction phases out once modified AGI exceeds $100,000 ($200,000 for joint filers).

4. What’s New for Seniors?

Taxpayers aged 65 and older can now claim an additional standard deduction of $6,000 ($12,000 for joint filers) starting in 2025 — offering meaningful relief for retirees.

5. What Are “Trump Accounts”?

For babies born between 2025 and 2028, the government will deposit a $1,000 “baby bonus” into a new Trump Account. Parents can contribute up to $5,000 per year to these accounts, which grow tax-free until the child turns 18. At that point, the account converts into a traditional IRA. No contributions are allowed before July 4, 2026, as the government finalizes program details and implementation rules.

Other Provisions You Should Know

Tax Cuts and Jobs Act (TCJA) Made Permanent

The BBB permanently extends the tax rates, brackets, and larger standard deduction established under the 2017 TCJA, along with the expanded Alternative Minimum Tax (AMT) threshold.

SALT Deduction Cap Increased

The State and Local Tax (SALT) deduction cap will increase from $10,000 to $40,000 starting in 2025 and will be indexed for inflation going forward. This change provides significant relief for taxpayers who itemize.

Qualified Business Income (QBI) Deduction Extended

The 20% QBI deduction for pass-through business owners has been made permanent, offering long-term clarity and stability for small business owners.

What This Could Mean for You

The economic impact of the BBB remains to be seen. The first four provisions alone are projected to cost roughly $350 million over the next four years. While the bill’s intent is to simplify the tax code, it’s safe to say tax professionals will remain essential to navigating these changes.

If you have questions about how these updates could affect your financial plan or tax strategy, contact your JT Stratford advisor — we’re here to help you make sense of it all.

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ⁱ https://www.congress.gov/bill/119th-congress/house-bill/1/text

ⁱ https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions

JT Stratford, LLC is an SEC-registered investment adviser. This content is for informational purposes only and does not constitute personalized investment advice. Investing involves risk, including the possible loss of principal. Additionally, while our services include tax planning, please note we do not offer specific tax services; so you will want to consult your tax preparer before implementing any tax planning strategies introduced here. Any reduction in taxes would depend on an individual’s tax situation. No information found on this website is intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. We do not offer tax or legal advice.