Tax Planning
Deductions You Didn’t Know You Could Claim Under the One, Big, Beautiful Bill
Explore the new deductions for seniors, tipped workers, and car loan interest introduced under the One, Big, Beautiful Bill. Make sure you're not leaving money on the table this tax season.
By NomadicTax Research Team • 5-8 min read • March 21, 2026
## What's New Under the One, Big, Beautiful Bill
The One, Big, Beautiful Bill (Public Law 119-21), signed into law July 4, 2025, brings several deductions into effect **for tax years 2025 through 2028**. Notably:
- **Senior deduction**: Taxpayers aged 65 or older can claim an additional deduction of **$6,000**—this is *in addition* to the existing standard deduction. This phases out for single filers with MAGI over $75,000, married filing jointly over $150,000. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors?utm_source=openai))
- **No Tax on Tips**: Employees or self-employed individuals in specified tipped occupations can deduct up to **$25,000** in cash or charged tips, under income thresholds. Requires certain reporting obligations. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors?utm_source=openai))
- **No Tax on Overtime**: Those who earn overtime pay can deduct the portion exceeding their regular rate (e.g. the “half” premium in time-and-a-half). Up to **$12,500** for singles, **$25,000** jointly. Subject to income phase-outs. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors?utm_source=openai))
- **Car Loan Interest Deduction**: Interest on loans used to purchase **new** personal vehicles (assembled in the U.S.) qualifies for up to **$10,000**, phase-outs apply to higher earners. Vehicles must not be for business use. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors?utm_source=openai))
## Examples: How These Affect Real Taxpayers
- **Senior Spouse Example**: Jane, 67, files jointly with her husband. Their MAGI is $140,000. They can claim the $6,000 senior deduction for each spouse who qualifies—so potentially $12,000 extra deduction.
- **Tip Worker**: Carlos, a bartender earning $50,000 with $7,000 in qualified tips, can deduct those tips (up to the $25,000 limit) even if he doesn’t itemize. Submissions by employer/payor will include tip-occupation reporting.
- **Gig/Ontime Worker**: Maria does contract work and gets irregular overtime. If her overtime exceeds her base rate, she may be able to deduct that portion—provided she’s under the MAGI phase-out threshold and meets reporting requirements.
- **Vehicle Buyer**: John purchases a brand-new SUV assembled in the U.S., takes a loan for personal use. He pays interest in 2025. John could deduct up to $10,000 of that interest—subject to whether his income is within allowed range.
## Actionable Tips to Ensure You Qualify
1. **Check your modified adjusted gross income (MAGI)** to see whether you fall in a phase-out zone.
2. **Maintain clear records**: o Tip income, overtime pay breakdown, car loan documentation, proof of vehicle tagging and assembly origin.
3. **Include SSNs**: For married couples or dependents, valid Social Security Numbers (or ITINs where allowed) often matter for eligibility.
4. **Understand reporting deadlines**: Employers, financial institutions, or loan holders may have new information-return obligations.
5. **Use updated IRS tools**: Look for fact sheets or guidance to make sure you’re using the correct line items and deduction forms.
## Why It Matters
These deductions aim to increase tax fairness—helping seniors, service workers, overtime earners, and personal vehicle purchasers. Missing these could mean **losing thousands of dollars** in deductions or getting lower refunds. Always consider them in your tax plan.