Tax Planning
Tax Planning Strategies Under the One, Big, Beautiful Bill: What Individuals Should Know Now
The One, Big, Beautiful Bill has introduced sweeping changes—permanent deductions, higher standards, no more tax on tips or overtime. Here’s how to adapt your tax plan effectively under the new rules.
By NomadicTax Research Team • 5-8 min read • June 24, 2026
## Overview of the One, Big, Beautiful Bill for Individuals
The One, Big, Beautiful Bill (OBBB), enacted on **July 4, 2025** as Public Law 119-21, permanently changed many tax provisions for individuals and workers. Key changes include increased standard deductions, **no tax on car loan interest**, no tax on tips or overtime, and enhanced deductions for seniors.([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions-individuals-and-workers?utm_source=openai)) These changes are *permanent* and affect tax years beginning in 2025 and 2026.([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions-individuals-and-workers?utm_source=openai))
## Practical Planning Moves
Here are actionable strategies to take advantage of recent law changes:
- **No more taxation of tips or overtime**: If you regularly earn income through tips or overtime, ensure your payroll and reporting reflect that these are now tax-free under OBBB. Adjust your withholding to avoid overpaying early in the year.([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions-individuals-and-workers?utm_source=openai))
- **Car loan interest deduction**: Suppose you’re buying a vehicle with a loan—for 2025 and 2026, the interest you pay may be deductible. Work with your tax advisor to calculate how much you can deduct under the new rules.([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions-individuals-and-workers?utm_source=openai))
- **Enhanced standard deductions and senior deductions**: For 2026, the standard deduction is now **$32,200 for married filing jointly**, $16,100 for single or married filing separately, and $24,150 for heads of households.([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions-individuals-and-workers?utm_source=openai)) Seniors, or those aged 65+, get an additional enhancement—for 2025-2028, an additional $6,000 per person ($12,000 if both spouses qualify).([irs.gov](https://www.irs.gov/newsroom/2026-filing-season-updates-and-resources-for-seniors?utm_source=openai))
- **Foreign Earned Income Exclusion (FEIE) & Qualified Business Income Deduction (QBID)**: For those earning abroad, the FEIE is indexed upward. Meanwhile, QBID is now *permanent*, and minimal levels of income from an active trade or business may still allow for the deduction even if your income is modest.([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
## Example Case Study
*Maria, a 68-year-old married filer with $160,000 AGI, receives significant tip income and pays interest on her car loan.* Under OBBB:
- She claims an extra senior deduction since both spouses are 65+.
- Tip and overtime income are *not taxed*, lowering her taxable income substantially.
- Her car loan interest is deductible.
These combine to significantly drop her taxable income and her marginal rate bracket.
## Action Steps for Tax Planning
1. Review pay stubs and payroll allocations to ensure tip/overtime income is handled correctly.
2. Update estimates of itemized deductions—including interest and charitable contributions—versus taking the boosted standard deduction.
3. Adjust your withholding and estimated tax payments using the IRS withholding estimator tool, which now reflects OBBB changes.([irs.gov](https://www.irs.gov/newsroom/tax-withholding-estimator-now-reflects-changes-under-the-one-big-beautiful-bill?utm_source=openai))
4. If you're a senior taxpayer, check AGI thresholds for phaseouts of enhanced deductions.
5. Consult a tax professional, especially if income sources are varied or include foreign income.
## Bottom Line
OBBB has delivered major benefits for individuals and workers. By staying aware of what deductions and exclusions you now qualify for—or what you no longer need to include—you can maximize tax savings. Plan ahead and adjust your strategy now to benefit for tax year 2025-2026 and beyond.