News & Trends

The One Big Beautiful Bill Signed Into Law

President Trump signed “The One Big Beautiful Bill” on July 4, 2025.  This bill covers a wide range of tax provisions.  Below are highlights of several provisions of the bill that may be of interest to you.

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529 Accounts

529 accounts allow individuals to save for a beneficiary’s education-related expenses.  Distributions are not taxable if used for qualified educational expenses.  The bill increases the allowable qualified educational expense for tuition at an elementary or secondary private, public, or religious school from $10,000 to $20,000.  In addition, certain non-tuition expenses (i.e. books, online materials, tutoring fees) are considered a qualified educational expense.

Trump Accounts

 This bill establishes a new tax-deferred savings account for individuals under the age of 18.  These “starter IRA” accounts become traditional IRA accounts once the beneficiary reaches age 18.  The federal government, at the parents’ request, will make a $1,000 contribution to Trump accounts for American citizens born between 2025 and 2028.  The goal of these accounts is to encourage all kids to save and invest early in life.  However, these accounts have contribution and investment restrictions.

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General Tax Provisions

The tax provisions of the 2017 tax bill are made permanent, including:

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• Individual tax rates

• Increased standard deduction

• Decreased corporate tax rates

• 100% bonus depreciation

The bill creates new tax provisions, including:

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•  “No Tax on Tips”

  • Employees and self-employed individuals may deduct qualified tips, defined as voluntary cash or charged tips received from customers or through tip sharing.

  • The maximum annual deduction is $25,000.

  • The amount of the deduction is reduced by $100 for each $1,000 of the taxpayer’s modified adjusted gross income that exceeds $150,000 ($300,000 for married filing jointly).

  • The deduction is available even if the taxpayer does not itemize their deductions.

  • If the taxpayer is married, the deduction is only available if they and their spouse file a joint return.

  • This tip deduction begins in 2025 and expires after 2028.

• “No Tax on Overtime”

  • Individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay.  For example, an individual earning “time-and-a-half” overtime pay can deduct the “half” portion.

  • The maximum annual deduction is $12,500 ($25,000 for married filing jointly).

  • The amount of the deduction is reduced by $100 for each $1,000 of the taxpayer’s modified adjusted gross income that exceeds $150,000 ($300,000 for married filing jointly).

  • The deduction is available even if the taxpayer does not itemize their deductions.

  • If the taxpayer is married, the deduction is only available if they and their spouse file a joint return.

  • This overtime deduction begins in 2025 and expires after 2028.

• State and Local Tax (SALT) Increase

  • The bill increases the maximum SALT deduction from $10,000 to $40,000.

  • This new maximum is subject to an income phaseout beginning at $500,000.

• “No Tax on Car Loan Interest”

  • Individuals may deduct interest paid on a load used to purchase a qualified vehicle, provided the vehicle is purchased for personal use and meets other eligibility requirements.

  • Lease payments do not qualify.

  • The maximum annual deduction is $10,000.

  • The deduction phases out for taxpayers with modified gross income over $100,000 ($200,000 for married filing jointly).

  • To qualify for the deduction, the interest must be paid on a loan that is:

    • Originated after December 31, 2014

    • Used to purchase a vehicle with the taxpayer as the original owner (new vehicles only; used vehicles do not qualify)

    • For a personal use vehicle (not for business or commercial use), and

    • Secured by a lien on the vehicle.

• Deduction for Seniors

  • The bill provides an additional $6,000 standard deduction for seniors (individuals who have reached age 65).

  • This new deduction for seniors begins in 2025 and expires after 2028.

Nonpartisan economic projections indicate that the bill will add approximately $4 trillion to the national debt over the next decade.

The bill is nearly 900 pages long.  BSE Accounting & Consulting will provide additional information as more details are available.  If you have any questions, contact BSE Accounting & Consulting at (618) 979-4838 or click here.