The new tax bill was signed into law on July 4, 2025. This is a major tax law change that extends many benefits from the 2017 Tax Cuts and Jobs Act, while adding new deductions and incentives for specific groups of taxpayers (seniors, tipped workers, overtime recipients, etc.). It offers opportunities for both individuals and small business owners, but also introduces complexity (phaseouts, caps, sunset rules).
Your 2024 tax return is not impacted. These changes apply starting with your 2025 return.
This FAQ will be updated with more information about the impact on TaxAct 2025 as details are finalized.
Some key changes include:
No Tax on Tips
Allows an above-the-line deduction for tips for eligible taxpayers. See the FAQ “No Tax on Tips” – Qualified Tips and the New Tax Bill for details.
No Tax on Overtime Pay
Allows an above-the-line deduction for overtime pay for eligible taxpayers. See the FAQ “No Tax on Overtime” – Qualified Overtime and the New Tax Bill for details.
SALT Deduction Cap Increase
Temporarily raises the SALT cap to $40,000 for married couples earning up to $500,000, with a cap of $10,000 for AGI above $500,000. More information will be provided as soon as IRS provides details.
Extra Deduction for Seniors
Seniors (65+) are eligible to claim an additional deduction of $6,000. This deduction phases out for AGI over $75,000 (single) or $150,000 (married filing jointly).
Child Tax Credit Increased
CTC increased to $2,200 per qualifying child. With the refundable portion increased to $1,400.
Car Loan Interest Deduction
Claim up to $10,000 per year for qualified vehicle loan interest. See the FAQ “No Tax on Car Loan Interest” – Vehicle Loan Interest and the New Tax Bill for details.
TCJA Extensions
OB3 extends some parts of the 2017 Tax Cuts and Jobs Act (TCJA) beyond 2025, including keeping the higher standard deduction levels in place, maintaining updated tax brackets, and eliminating personal exemptions.
1099-K Reporting Thresholds
For 2025, Form 1099-K will only be issued if both the amount reported exceeds $20,000 and there are more than 200 transactions per year.
NOTE: This new tax bill was signed into law on July 4, 2025. The One Big Beautiful Bill Act (OBBB or OB3) is now also being referred to by lawmakers as the Working Families Tax Cut Act. You may see one or both names used, but they refer to the same set of tax changes.
