The OBBB - One Big Beautiful Bill

Cutting Through the Hype — What the One Big Beautiful Bill Really Does for Your Taxes

Independence Day headlines promised “the biggest middle-class tax cut ever.” 24-hour news crawls shouted that Social Security is now tax-free, tips are untaxed, and the SALT cap is dead. Nice soundbites—but the statute that landed on the President’s desk tells a more nuanced story. Here’s the straight forward information:

1. Social Security: still taxable

The rumor: “Seniors will pay zero tax on their benefits.”
The law: §86 is untouched. What’s new is a temporary “Senior Bonus” deduction—$6,000 for each taxpayer age 65+ ($12,000 on a joint return)—available 2025-2028. It phases out starting at $75 k AGI single / $150 k joint. For many retirees that extra deduction wipes out the provisional-income worksheet, so their benefits appear untaxed—but they’re still included in the calculation. (marketwatch.com, cbsnews.com)

Planning tip: If you’re on the cusp of the phase-out, time Roth conversions or large IRA withdrawals to stay under the AGI ceiling through 2028.

2. Standard deduction—bigger and permanent, but not jaw-dropping

The TCJA-doubled standard deduction no longer sunsets and is indexed higher: $15,750 single, $23,625 head-of-household, $31,500 married filing jointly for 2025. That’s about an 8 % bump, not a 100 % explosion. (congress.gov)

3. “No Tax on Tips” & “No Tax on Overtime” — not exclusions, capped deductions

• Cash      tip deduction (§110101): Above-the-line write-off of up to $25,000     per taxpayer (2025-2028). Phases out past $150 k AGI single / $300 k      joint. Electronic tips don’t count. (kiplinger.com,      congress.gov)
• Overtime      deduction (§110102): Above-the-line write-off of up to $12,500     per taxpayer ($25,000 joint) on the 50 % FLSA overtime premium.      Same phase-out thresholds; barred for highly-comp employees (>$160 k      comp or 5 % owners). (congress.gov,      congress.gov)

What this means: Your W-2 will still report the income and you’ll still pay FICA; you just get to deduct a slice on Form 1040. Employers and POS vendors should brace for new W-2 boxes and payroll-software patches by Q3 2025.

4. SALT cap—higher not gone

The deductible ceiling on state & local taxes jumps from $10,000 to $40,000 for 2025-2029 and then falls back unless Congress acts. Inflation bumps the cap about 1 % per year; phase-downs kick in above $500 k MAGI. (bipc.com, journalofaccountancy.com)

5. Made-in-USA car-loan interest deduction

Buy a new vehicle whose final assembly is in the United States and you can deduct up to $10,000 of loan interest (2025-2028). Phases out above $100 k / $200 k AGI. Existing EV credits vanish. Keep that window sticker! (kiplinger.com, fidelity.com)

6. Estate & gift tax exemption now $15 million

Beginning 2026, the unified credit rises permanently to $15 million per person ($30 million joint), indexed for inflation. No special “family farm” carve-out made it into the final text. (marketwatch.com, frostbrowntodd.com)

7. Business breaks that did survive conference

• 100      % bonus depreciation on qualifying assets placed in service after Jan 19, 2025—no phase-down. (kbkg.com,      taxfoundation.org)
• Section      179 expensing cap doubled to $2.5 million (phase-out at $4      million). (nfib.com)
• Section      199A (QBID) made permanent; phase-in threshold rises to $75 k single /      $175 k joint, and for some filers the rate nudges up to 23 %. (bipc.com, taxfoundation.org)
• Immediate expensing of domestic R-&-D costs, retroactive to 2022. (kbkg.com)

Final word

The One Big Beautiful Bill is indeed a sizable tax cut for many middle-income families and small businesses—but most of the splashiest claims you heard over the weekend are headlines, not reality. As always, the real savings live in the details and deadlines.

We are now accepting tax planning appointments for August 2025. Send us an email at info@williamsazbookkeeping.com and we will create an appointment for you.