Tax Planning
Maximizing the One, Big, Beautiful Bill Deductions: What You Need to Know
Unlock new deductions for tips, overtime, car loan interest, and seniors under the One, Big, Beautiful Bill with practical record-keeping tips and filing guidance.
By NomadicTax Research Team • 5-8 min read • April 9, 2026
## New Deductions Introduced by the One, Big, Beautiful Bill (OBBB)
The One, Big, Beautiful Bill (Public Law 119-21), passed July 4, 2025, introduces several deductions for tax years 2025 through 2028. Key new benefits include:
- **Qualified Tips Deduction**: Eligible workers (employees or self-employed) may deduct up to **$25,000** per return for qualified tips. ([irs.gov](https://www.irs.gov/newsroom/the-one-big-beautiful-bill-what-gig-economy-workers-should-know?utm_source=openai))
- **Qualified Overtime Deduction**: Individuals can deduct earnings exceeding the regular rate (“half-portion” of time-and-a-half) up to **$12,500** ($25,000 for joint filers) with income-based phase-outs. ([irs.gov](https://www.irs.gov/newsroom/the-one-big-beautiful-bill-what-gig-economy-workers-should-know?utm_source=openai))
- **Qualified Passenger Vehicle Loan Interest**: Deduct up to **$10,000/year** in interest on personal use car loans for new vehicles (final assembly in the U.S.), for vehicles under 14,000 lbs. ([irs.gov](https://www.irs.gov/newsroom/what-you-will-need-to-file-your-taxes-under-the-one-big-beautiful-bill?utm_source=openai))
- **Senior Deduction for Taxpayers 65+**: Additional standard deduction of **$6,000** per eligible senior individual (so up to $12,000 for married couples). ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors?utm_source=openai))
## What You’ll Need to Claim Them
These deductions require certain documentation and attention:
| Deduction | Recordkeeping / Required Info |
|---|---|
| Qualified Tips | Daily/weekly tip logs, employer reports, point-of-sale summaries; ensure Tips included in your W-2, 1099-MISC/NEC/K even though not separately identified. ([irs.gov](https://www.irs.gov/newsroom/the-one-big-beautiful-bill-what-gig-economy-workers-should-know?utm_source=openai)) |
| Overtime | Pay stubs or payroll summaries showing regular and overtime portions; employer’s reporting (similar to tips) on W-2 or 1099. ([irs.gov](https://www.irs.gov/newsroom/what-you-will-need-to-file-your-taxes-under-the-one-big-beautiful-bill?utm_source=openai)) |
| Car Loan Interest | Loan statements, VIN and evidence of final assembly in U.S., documentation that vehicle qualifies (personal use, new, etc.). ([irs.gov](https://www.irs.gov/newsroom/what-you-will-need-to-file-your-taxes-under-the-one-big-beautiful-bill?utm_source=openai)) |
| Senior Deduction | Proof of age (born date), Social Security number, filing status, and income to determine phase-outs. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors?utm_source=openai)) |
## How to Report Them on Your Tax Return
- These deductions will be claimed on **Schedule 1-A**, which is attached to Form 1040, 1040-SR, or 1040-NR. ([irs.gov](https://www.irs.gov/newsroom/what-you-will-need-to-file-your-taxes-under-the-one-big-beautiful-bill?utm_source=openai))
- Amount from Schedule 1-A transfers to **Form 1040**, line 13b (or line 13c on Form 1040-NR). ([irs.gov](https://www.irs.gov/newsroom/what-you-will-need-to-file-your-taxes-under-the-one-big-beautiful-bill?utm_source=openai))
- These deductions are available **whether or not** you itemize. ([irs.gov](https://www.irs.gov/newsroom/what-you-will-need-to-file-your-taxes-under-the-one-big-beautiful-bill?utm_source=openai))
## Income Phase-Outs & Limitations
- Most deductions phase out as modified adjusted gross income (MAGI) exceeds certain thresholds. For example:
- Tips & overtime deductions phase out above **$150,000 single / $300,000 married filing jointly**. ([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 phases out above **$100,000 single / $200,000 married joint**. ([eitc.irs.gov](https://www.eitc.irs.gov/pub/irs-pdf/p6126.pdf?utm_source=openai))
- Vehicles must be **new**, purchased after December 31, 2024, with their initial use starting with the taxpayer, and meet final assembly criteria. Used vehicles, leases, or vehicles not assembled in U.S. are excluded. ([eitc.irs.gov](https://www.eitc.irs.gov/pub/irs-pdf/p6126.pdf?utm_source=openai))
## Practical Tips & Examples
- **Gig Worker Example **: If you worked as a bartender in a tipped occupation earning $30,000 in tips, you could deduct up to $25,000 in qualified tips (subject to income thresholds). Keep receipts and employer tip reports. OR,
- **Overtime Example**: If you earned $5,000 overtime pay in 2025, you may deduct the half-portion (i.e. the portion above regular rate), up to the limits. Maintain pay stubs showing breakdown.
- **Car Loan Interest Example**: You buy a new sedan assembled in Michigan in 2025, pay $9,000 in interest. You meet MAGI requirement. You can deduct the full $9,000 provided all requirements satisfied. VIN & purchase contract help here.
## Timeline & Expiry
- These deductions are **temporary** and apply only **tax years 2025 through 2028**. ([irs.gov](https://www.irs.gov/newsroom/the-one-big-beautiful-bill-what-gig-economy-workers-should-know?utm_source=openai))
- Some energy or vehicle-related credits expire earlier (e.g. clean energy credits end Dec 31, 2025 for many categories). ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions?utm_source=openai))
## Action Steps for Taxpayers Now
1. Begin collecting and organizing tip logs, overtime records, loan documentation, and age proof.
2. Confirm your vehicle meets assembly and other criteria before purchasing (if considering a car loan in 2025/2026).
3. Review your expected income to anticipate phase-outs and understand whether you're eligible.
4. Monitor IRS guidance for the finalized list of occupations qualifying for qualified tips deduction. ([irs.gov](https://www.irs.gov/newsroom/the-one-big-beautiful-bill-what-gig-economy-workers-should-know?utm_source=openai))
Put simply, the One, Big, Beautiful Bill opens up new ways to reduce taxable income substantially — but success hinges on proper documentation and understanding of eligibility.