The Big Beautiful Bill: New Deductions for Workers, Drivers & Seniors in 2025–2028
- chimeinconsults2
- Jul 27
- 3 min read
Whether you’re a server hustling for tips, clocking in long hours of overtime, buying your next ride, or enjoying retirement, The Big Beautiful Bill is bringing bold new tax deductions your way from 2025 through 2028.
Let’s break it down:
💸 1. No Tax on Tips
If you work in a tipped occupation, you know how hard-earned that extra income is — and now it gets a major break.
✅ What’s Covered:
Voluntary cash or card tips you receive from customers, or through tip sharing.
Tips reported on a W-2, 1099, Form 4137, or another official IRS-accepted document.
💰 The Deduction:
Up to $25,000 a year (limited by your net income if you're self-employed).
You can claim it whether or not you itemize your taxes.
🚫 Who’s Not Eligible:
Self-employed in a Specified Service Trade or Business (SSTB) (like doctors, lawyers, consultants).
Employees working for SSTB employers.
📋 Requirements:
File jointly if married.
Include your Social Security Number.
IRS will publish an official list of qualifying tip-based occupations by October 2, 2025.
⏱️ 2. No Tax on Overtime
Putting in long hours at work? The overtime boost is finally getting a break too.
✅ What’s Covered:
The extra you earn from time-and-a-half pay under the Fair Labor Standards Act (FLSA).
Must be reported on a W-2 or 1099.
💰 The Deduction:
Up to $12,500 per year, or $25,000 if you’re filing jointly.
Available to all workers, not just itemizers.
📋 Requirements:
Social Security Number required.
Married couples must file jointly to claim the deduction.
The IRS will also give employers time to adapt to the new reporting rules in 2025.
🚗 3. No Tax on Car Loan Interest
Buying a brand-new car, truck, or motorcycle in 2025 or beyond? You can deduct the interest on your car loan.
✅ What’s Covered:
Interest on loans used to buy new, personal-use vehicles (not used or commercial).
The loan must start after Dec. 31, 2024, and be secured by the vehicle.
💰 The Deduction:
Up to $10,000 per year in interest.
Phases out above $100,000 ($200,000 for joint filers) in income.
🧾 What You’ll Need:
The Vehicle Identification Number (VIN) on your tax return.
Your car must be assembled in the U.S. (Check the label or use NHTSA’s VIN Decoder).
👵 4. New Deduction for Seniors
If you’re age 65 or older, you’ll enjoy an extra $6,000 deduction — on top of the existing senior standard deduction.
💰 The Deduction:
$6,000 per eligible person, or $12,000 for a couple where both qualify.
📉 Income Limits:
Deduction phases out over $75,000 in modified AGI ($150,000 joint).
📋 Requirements:
Must turn 65 or older by Dec. 31 of the tax year.
Include your SSN and file jointly if married.
📅 When Does It Start?
All of these deductions go into effect starting January 1, 2025, and will run through 2028. The IRS will issue detailed guidance and transitional relief to help taxpayers and employers navigate the changes — especially in year one.
Why This Bill Matters
The Big Beautiful Bill aims to support everyday workers, savers, and seniors — not just corporations and the ultra-wealthy. Whether you're waiting tables, working double shifts, buying a new ride, or enjoying your golden years, these deductions are designed to ease your tax burden and boost your bottom line.
Need help understanding how this affects you?
Let’s talk. I specialize in helping working individuals, small business owners, and families take full advantage of every dollar they earn.
Reach out today — and let’s get you ready for your 2025 Taxes
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