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ONE BIG BEAUTIFUL BILL ACT
What does the new tax reform mean for you?
On average, Americans could get about $1,000 more back on their taxes this year.* The experts at H&R Block can help you get every dollar you deserve.
*All tax situations are different. Not everyone gets a refund.
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New tax changes:
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Effective for 2025 through 2028, individuals who are 65+ may claim an additional deduction of $6,000 per individual ($12,000 total for a married couple where both spouses qualify). This new deduction is in addition to the current additional standard deduction and for both itemizing and non-itemizing taxpayers.
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Effective for 2025 through 2028, the OBBBA introduces a deduction for qualified overtime pay, meaning overtime income won’t be taxed the same way as regular wages. This is designed to boost take-home pay for hourly and salaried workers.
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Effective for 2025 through 2028, qualifying taxpayers may deduct tips up to $25,000 per year. This deduction applies to those making less than $150,000 ($300,000 for joint filers).
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Effective for 2025 through 2028, qualifying taxpayers may deduct up to $10,000 per year for new, qualifying vehicles.
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Other tax changes:
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The lower individual tax rates and income tax brackets set to expire in 2025 are now made permanent by OBBBA. The increased standard deduction set to expire in 2025 has been made permanent and increased to $15,750 for single filers and $31,500 for joint filers for 2025.
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The Child Tax Credit was set to default to $1,000 after 2025, however, the OBBBA increased the Child Tax Credit to $2,200 for every qualifying child starting in 2025. The credit amount will be adjusted annually for inflation starting in 2026.
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The $10,000 SALT deduction limit was set to expire in 2025, however the OBBBA increased the cap to $40,000 for 2025 for those with incomes up to $500,000. This increased cap will rise by 1% annually through 2029 and default back to $10,000 in 2030.
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The 20% pass-through business income deduction was set to expire in 2025, but the OBBBA made it permanent. The bill also created a minimum deduction of $400 for businesses with at least $1,000 of income.
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A smart tax strategy starts with understanding the new Bill.
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How does the new tax law affect small business owners?
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1099-K reporting threshold
The 1099-K threshold increased to $20,000 in payments and 200+ transactions for 2025, so if you received a 1099-K in the past, you may not receive one in the future.
Tips or overtime pay
In 2026, businesses with employees who earn tips or overtime pay must provide this information to employees.
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Start keeping detailed records now so you can provide this info to employees. You might also look into bookkeeping or payroll services.
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Independent contractors
In 2026, if your business pays independent contractors $2,000+ (increased from $600), you’ll need to issue a Form 1099-NEC.
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Start tracking independent contractor payments now to stay ahead.
New deduction minimum
In 2026, the Qualified Business Income (QBI) deduction will be made permanent and a new minimum $400 deduction will be available for certain taxpayers.
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Make sure your income is properly tracked so you don’t miss out on this deduction.
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Is it time to look into a new business structure?
With the new tax law, it may be worth changing your business to an S corp to save you money on your taxes. Learn more about business structures
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Stay up-to-date with tax changes
Tax changes are nothing new to us — H&R Block has been navigating tax law for over 70 years and counting. We’ll help keep you informed, educated, and ready to file with confidence.
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We’re here to help
With nearly 70 years of experience and 20 million tax returns filed each year, H&R Block is uniquely qualified to help you get the best possible tax outcome in an ever-evolving economy.
FAQs
The One Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025. It is a large package that includes sweeping tax reform, making many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) permanent. It also introduces new tax rules affecting individuals, families, and businesses starting this year, 2025, and beyond.
There is not a single effective date for all the provisions in the the new tax law. Some of the provisions are effective for tax year 2025, while the remainder are mostly effective for tax year 2026 and beyond. Some provisions to consider for 2025 include the increased Child Tax Credit, an increase in the 1099-K threshold, deductions for tips and overtime, and the elimination of the credit for electric vehicles and energy efficient home improvements.
Many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) will be made permanent. The Act also creates new tax benefits such as a deduction for qualified tips and overtime, a deduction for seniors, and a deduction for qualifying new car loan interest.
Due to the OBBBA, a large number of tax changes are being made that will impact every single taxpayer in at least one way. For example, it extends the tax brackets created by the TCJA. Those brackets are 10%, 12%, 22%, 24%, 32%, 35% and 37%. Additionally, many of the benefits that are considered when determining taxable income are affected along with new benefits being added.
The OBBBA affects all taxpayers in some way, no matter their situation — whether from an extension of the TCJA tax rates, new deductions for overtime and tips, or more. Every taxpayer should evaluate their withholdings and/or estimated payments to make sure they are accounting for the provisions that affect them.
The standard deduction from the TCJA is now permanent and slightly expanded. For 2025, this means:
- Single/Married Filing Separately: $15,750
- Head of Household: $23,625
- Married Filing Jointly/QSS: $31,500
Several clean energy credits are being eliminated or repealed, including:
- New and used EV credits (after 9/30/2025)
- Residential energy credits (after 2025)
- Alternative fuel refueling credit (after 6/30/2026)
This means you may need to move quickly if you wish to purchase a qualifying vehicle for the credit or make qualifying home improvements.No, personal and dependent exemptions are permanently eliminated under the OBBBA, with an exception for certain seniors 65 and older.
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