If you’ve been skimming headlines or hearing buzz about the “One Big Beautiful Bill Act” (OBBBA), officially known as H.R. 1, you might wonder, “Does this really affect me?” Spoiler alert: Yes, absolutely. This sweeping piece of legislation impacts just about everyone, whether you’re a small business owner or a W-2 employee, whether you’re a parent or retired and loving it.

Even if you’re not glued to the tax news (and really, who is?), it’s worth knowing how these changes could affect your wallet before tax season sneaks up on you.

But don’t worry. You won’t need a law degree or an IRS decoder ring. In this article, we break down what the new law means for individual taxpayers.

Keeping the higher standard deduction

Many provisions in the OBBBA aren’t exactly new. Instead, they extend or make permanent changes initially set under the 2017 Tax Cuts and Jobs Act (TCJA). One of those is the higher standard deduction.

Initially, the standard deduction was supposed to revert to pre-TCJA levels after 2025, essentially cutting them in half for all filing statuses. That would mean more people itemizing deductions instead of taking the simpler standard deduction.

If you’re not someone with big mortgage interest, state and local taxes, or charitable donations, the standard deduction makes tax filing a little easier. Still, it’s a good idea to keep your receipts for charitable donations and medical expenses. In some years, itemizing might work in your favor.

Bigger child tax credit (for some)

The OBBBA increases the federal child tax credit from $2,000 to $2,200 per qualifying child. It also indexes the credit for inflation starting in 2026.

Another change to the credit is that parents or guardians need a Social Security number to claim it. Previously, eligible families with children could claim the child tax credit regardless of immigration status.

Increased SALT cap

During negotiations in Congress, there was a lot of talk of raising the $10,000 cap on deducting property, sales, and income taxes paid to state and local governments, also known as SALT. The OBBA didn’t eliminate the cap entirely, but raised it to $40,000 for people with modified adjusted gross income (MAGI) income under $500,000 ($250,000 for married filing separately).

For taxpayers with MAGI above that limit, the cap is gradually reduced by 30% until it reaches $10,000. Both the cap and the income threshold increase by 1% annually.

If you live in a high-tax state, this may change whether it makes sense for you to itemize vs. claiming the standard deduction. However, this change is temporary, as the $10,000 cap is scheduled to return after 2029.

New deduction for seniors

The OBBBA created a new tax deduction for taxpayers age 65 and older. Seniors will be able to take an additional $6,000 off of their taxable income, regardless of whether they itemize or claim the standard deduction.

This deduction gradually phases out for taxpayers with MAGI over $75,000 ($150,000 if married filing jointly). It’s not available to married couples filing separately, and taxpayers must have a valid Social Security number to claim it.

This new deduction is temporary, as it’s only available for 2025 through 2028.

“No tax” on tips or overtime

On the campaign trail, President Trump promised “no tax” on tips or overtime. While the OBBB didn’t exactly eliminate taxes on these types of income, it did create new deductions for workers receiving these types of income.

Through 2028, employees in roles that customarily and regularly receive tips can deduct up to $25,000 in “qualified tips” from their federally taxable income. Qualified tips are amounts voluntarily paid by patrons, including those received through tip sharing.

The Secretary of the Treasury is expected to publish a list of qualifying occupations.

Workers who receive overtime pay can deduct up to $12,500 ($25,000 for joint filers) in overtime pay from their federally taxable income. The deduction only applies to the compensation paid in excess of the regular rate. In other words, it only gives a tax break on the “half” part of time and a half.

Both deductions phase out for taxpayers with MAGI over $150,000 ($300,000 for joint filers).

A new car loan interest deduction

If you’re in the market for a new car, a new tax deduction could sweeten the deal. It allows taxpayers to deduct up to $10,000 in qualified car loan interest. However, there are a few rules to keep in mind:

• The vehicle must be new (used cars don’t qualify)
• It must have a “final assembly” in the U.S.
• You must include the vehicle identification number (VIN) on your tax return

This deduction phases out if your MAGI is over $100,000 ($200,000 if married filing jointly).

Repeal of clean energy credits

The bill permanently ends most clean energy credits, including the electric vehicle (EV) tax credits and residential energy tax credits.

Limit on gambling losses

Starting in 2026, taxpayers with gambling losses will see a limit to how much of that loss can be claimed on their taxes. Only 90% of wagering losses are deductible, up to the amount of their winnings. This change could result in taxes owed on a portion of gambling winnings.

Charitable deduction for non-itemizers

Starting in 2026, taxpayers who claim the standard deduction can claim a charitable deduction for cash contributions to qualifying charities. The new deduction is capped at $1,000 for single filers and $2,000 for married couples filing jointly.

It doesn’t apply to non-cash contributions made to a charity, so the donations of clothing, household goods and other property won’t qualify.

What should you do next?

Tax law changes are like weather forecasts: they’re always changing and often hard to interpret. But with a little tax planning, you can take advantage of what’s available now and prepare for what’s ahead.

For now, we recommend:

• Review your withholdings to make sure you’re not over- or underpaying taxes
• Double-check your eligibility for the new tax deductions, including those for children and other dependents, charitable contributions, tips, overtime, and new car loan interest
• Keep good records for any potential deductions

It’s also a good idea to work with a tax professional who knows your situation and can explain, in plain language, how the One Big Beautiful Bill Act will impact your tax filings.

H.R. 1 might not be the easiest bedtime read, but it does include real, money-saving changes that could benefit you if you’re proactive. If reading about tax legislation feels like assembling IKEA furniture without the manual, don’t stress. Reach out to NewWay Accounting. We can help you navigate it all.