Prepare for the Changes from the One Big Beautiful Bill: What Can I Do?
Prepare for the Changes from the One Big Beautiful Bill:
What Can I Do?
Written by: Vincenzo G. Testa, CPA, CFP®, ECA
The One Big Beautiful Bill (OBBB) takes effect in 2025 and brings some of the most significant tax changes in years. While much of the law aims to simplify taxes, the real opportunity lies in planning ahead.
Here are four key changes and how you can prepare -
1. The New Senior Deduction
What’s changing:
Taxpayers 65 and older can claim an extra $6,000 (single) or $12,000 (joint) deduction beginning in 2025. It phases out at $75,000/$150,000 of income and expires after 2028.
How to prepare:
- Plan retirement withdrawals to stay under the phaseout.
- Time Social Security and RMDs strategically.
- Take advantage of the deduction while it lasts (2025–2028).
2. Auto Loan Interest Deduction
What’s changing:
For the first time in decades, you can deduct up to $10,000 in auto loan interest for a new, U.S.-assembled vehicle purchased after December 31, 2024. Available even if you take the standard deduction.
How to prepare:
- Confirm the vehicle you purchase is assembled in the U.S.
- Keep loan and interest records — leases and used cars don’t count.
3. Expanded SALT Cap
What’s changing:
The cap on state and local tax deductions will rise from $10,000 to $40,000 for 2025–2029 before reverting in 2030. This helps taxpayers in high-tax states who itemize, like New York.
How to prepare:
- Time property tax payments to maximize deductions.
- Monitor income — benefits phase out around $500,000.
4. No Tax on Tips and Overtime
What’s changing:
From 2025–2028, you can deduct up to $25,000 in tips and $12,500 (single) / $25,000 (joint) in overtime pay, even if you don’t itemize.
How to prepare:
- Track your tip and overtime income carefully.
- If near phaseout thresholds ($150,000/$300,000), time extra income strategically.
- Lowering AGI may also boost eligibility for other tax credits.
Plan Now, Don’t Wait. Most provisions in the One Big Beautiful Bill are temporary, so early planning is key.
To learn how these new provisions could impact your financial plan, contact our team today for a personalized tax strategy review.
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