New Tax Deductions You Need to Know: What the One Big Beautiful Bill Means for You

If you're looking to keep more of your hard-earned income, the recently passed One Big Beautiful Bill (OBBBA) brings some exciting changes. One of the most impactful updates? Expanded tax deductions for individuals. Whether you're working overtime, buying a U.S.-made car, or heading into retirement, there’s something in this bill that could lower your tax bill. Here's what you need to know.

1. Expanded SALT Deduction – Relief for Middle-Income Taxpayers

For years, the State and Local Tax (SALT) deduction was capped at $10,000—a limit that particularly affected many households in high-tax states. Now, OBBBA temporarily raises the SALT cap to $40,000 for households earning under $500,000, providing significant relief through 2030.

What it means for you:

• If you itemize deductions and pay high property or income taxes, this could put thousands of dollars back in your pocket.

• After 5 years, the cap reverts unless extended by future legislation.

2. New Deductions for Tips and Overtime

Millions of workers in hospitality, healthcare, and service industries rely on tips and overtime—and now, those earnings are deductible.

Who benefits:

• Waitstaff, delivery drivers, nurses, and other hourly workers.

• If you report a lot of tips or logged OT in 2025 and beyond, you could see a lower taxable income—and a smaller tax bill.

3. Auto Loan Interest Deduction – But Only for U.S.-Built Cars

Planning to buy a car? There’s a new twist: Interest on auto loans is now deductible, but only if the vehicle is assembled in the United States.

What it means for car buyers:

• Buy American, and you can write off part of your loan interest.

• Good news if you're eyeing a Ford, Tesla, or other U.S.-manufactured vehicle.

4. New Senior Deduction – Up to $6,000

If you’re 65 or older, OBBBA introduces a new senior-specific deduction of up to $6,000—on top of the standard deduction and any retirement-related tax breaks.

Why it matters:

• Helps offset healthcare costs, inflation, and limitations on fixed income.

• Available even if you don’t itemize.

Bottom Line

The One Big Beautiful Bill brings real, meaningful tax relief to working families, seniors, and American consumers. These deductions reflect a shift toward rewarding work and encouraging domestic spending—while offering targeted support where it's most needed.

As always, give Andrew Schliesman Tax & Accounting LLC a call to see how these new deductions apply to your situation, and whether itemizing or taking the standard deduction makes more sense in light of the new rules.