The One Big, Beautiful Bill- Chapter 2: Provide New Middle-Class Tax Relief & Chapter 3: Certainty and Competitiveness for American Job Creators
On July 4th, 2025, The One Big Beautiful Bill (BBB) became law after passing the Senate, the House, and the President. This bill includes a section pertaining to finance and tax (Title VII-Finance).
Our team has reviewed the bill and have drafted these posts to provide you with relevant information and explanations about what this means for you. We will separate chapters from the bill into shorter blog posts for specificity and clarity. Please note that this is not a complete list of changes, just ones we have found to be relevant to our clients.
Chapter 2: Delivering on Presidential Priorities to Provide New Middle-Class Tax Relief
There is a new deduction for qualified tips which allows a maximum deduction of $25,000 per taxable year. This deduction is allowed for taxpayers who do not itemize deductions. There are new reporting requirements for cash tips to be on Form W-2. A SSN is required to claim the deduction. The deduction is applicable starting after Dec 31, 2024 and is terminated for tax years after Dec 31, 2028.
There is a new deduction for qualified overtime compensation. The maximum deduction is $12,500 ($25,000 joint). Employers must report qualified overtime compensation on Form W-2. A SSN is required to claim the deduction. The deduction is applicable starting after Dec 31, 2024 and is terminated for tax years after Dec 31, 2028.
Qualified passenger vehicle loan interest is excluded from the definition of “personal interest”, making it deductible. The maximum interest is $10,000 per tax year. This deduction is allowed for taxpayers who do not itemize deductions.This is applicable to tax years beginning after Dec 31, 2024 and before Jan 1, 2029.
“Trump Accounts” have been introduced and are to be treated similar to IRAs. The beneficiary must have a SSN before the account can be made.Beneficiaries must be children/under the age of 18.
Chapter 3: Establishing Certainty and Competitiveness for American Job Creators
Paid Family Medical Leave is modified so that employers can elect to calculate the credit based on wages paid to employees on leave or premiums paid for an insurance policy. The definition of "qualifying employee" is modified. The amendment applies to tax years beginning after Dec 31, 2025.
If you have any questions or would like a deeper explanation of any of the changes described above, please contact info@wbcpafirm.com to schedule an appointment with Cameron. For a complete breakdown of the BBB, see Congress’ official website.
Source Documents used:
HR1-119th Congress- Enrolled Bill
ISCPA’s “One Big Beautiful Bill Act- What is in the New Law?”