1040 Filer? Don’t miss out on these tax saving opportunities embedded within OBBBA

The “One Big Beautiful Bill Act” – yes, that’s the real name – is a sweeping new tax law signed on July 4, 2025. Dubbed the “Big Beautiful Bill” for short, it delivers the largest tax cut in American history and introduces many changes that affect individual taxpayers. If you file a Form 1040, you’ll want to know how to take advantage of this law to keep more of your hard-earned money. Below we break down three practical ways this new bill can boost your tax refund (or lower your tax bill) for 2025. This is not a political article. This is me, James Flecker, writing straight forward advice for individual filers on how to make sure they’re saving the most of their hard earned money as possible.

1. Keep More of Your Paycheck – Tax-Free Overtime and Tips

One of the most talked-about perks of the Big Beautiful Bill is the “no tax on overtime pay” and “no tax on tips” provisions. In short, certain wages you earn from overtime and tips can now be deducted from your income – effectively making them tax-free up to new limits. This means many service industry and hourly workers will owe less tax and take home more pay. Here’s how this work:

• No Tax on Tips: If you earn tips in a job that customarily receives tipping (for example, waiting tables or bartending), you can now deduct those tips from your taxable income up to $25,000 per year. Both employees and self-employed workers who report tip income qualify. This deduction is available even if you take the standard deduction (no itemizing required). Income cap: The benefit begins to phase out if your modified adjusted gross income is over $150,000 (or $300,000 for joint filers). In practice, this could save a typical tipped worker around $1,300 in taxes each year according to House tax writers.

• No Tax on Overtime Pay: Do you work overtime? The portion of your pay that is the overtime premium (the “time-and-a-half” extra pay rate required for overtime) can now be deducted as well. This deduction is capped at $12,500 per year (or $25,000 for married couples filing jointly) and likewise phases out above $150,000 income (or $300,000 for joint). Both W-2 employees and certain 1099 gig workers can qualify. Like the tip deduction, you can claim this even if you don’t itemize deductions. This effectively makes your overtime premium pay tax-free up to the limit – a boost that Congressional figures estimate could save an average hourly worker about $1,400 a year in taxes.

  
  

How to use these: When tax time comes, be sure to report your qualified tip income and overtime pay on the new deduction lines of your 2025 tax return. Employers and payers will be issuing new forms or info on your tips and overtime earned, so keep an eye out for those. The key is that you must provide a valid Social Security Number on your return (and file jointly if married) to claim these deductions. By taking advantage of these “no tax” provisions, you’ll effectively keep more of your paycheck tax-free, rewarding your hard work.

2. Grab New Deductions for Big Expenses – Cars, State Taxes, and Seniors

The Big Beautiful Bill also expands deductions for some of life’s major expenses, putting more money back in your pocket. Whether you’re buying a car, paying high state taxes, or are a senior citizen, there are new or bigger write-offs to use on your 2025 return:

• Car Loan Interest Deduction: For 2025 through 2028, if you take out a loan to purchase a new personal vehicle, you can deduct the interest you pay on that loan (up to $10,000 per year). This is a brand-new deduction – previously, interest on personal car loans wasn’t deductible at all. To qualify, the car must be for personal use (not a business vehicle), and it must be purchased new with final assembly in the U.S. (check the window sticker or VIN for assembly location). Used cars and leases don’t count, and high-income earners (over $100,000 single or $200,000 joint) will see this benefit phase out. Tip: If you’re in the market for a car, buying sooner to take advantage of this deduction could save you a nice chunk in taxes. Just remember to note your vehicle’s VIN on your tax return when claiming the interest deduction.

• State and Local Taxes (SALT) – Higher Deduction Cap: Homeowners and taxpayers in high-tax states rejoice – the bill quadrupled the SALT deduction cap from $10,000 to $40,000 for 2025 (and slightly more in later years). This means if you itemize deductions, you can now deduct up to $40k of your combined state income taxes and property taxes on your federal return (previously any amount above $10k was not deductible). There’s a catch for very high earners: if your income is over $500,000 (single or $500k+; $250k if married filing separately), the SALT deduction starts to phase out above that threshold. But for most taxpayers under that income level, the full $40,000 cap is available from 2025 through 2029. This change will especially help homeowners in states with high property taxes or anyone who had been hitting the old $10k limit. Essentially, more of your state/local tax payments are now deductible, which can significantly reduce taxable income for those who itemize.

• Extra $6,000 Deduction for Seniors: Americans age 65 or older get a special bonus deduction thanks to the Big Beautiful Bill. If you (or your spouse) are 65+ by the end of 2025, you can claim an additional $6,000 deduction on top of your standard deduction (or itemized deductions). Married seniors can get $6,000 each – so a senior couple could have $12,000 extra deducted in total. This is on top of the existing senior standard deduction increase under prior law, effectively doubling the tax benefit for seniors. Note there is an income phase-out: the $6k deduction starts to phase out if your modified AGI is above $75,000 (single) or $150,000 (joint). Still, many retirees will qualify. Bottom line: if you’re 65 or older, you can knock an extra $6,000 off your taxable income for 2025–2028, which will directly reduce your tax owed.

• Higher Standard Deduction for Everyone: Even if you don’t itemize, the standard deduction got a boost. The Big Beautiful Bill locked in the larger standard deductions from the 2017 tax law and bumped them up slightly more. For 2025, the standard deduction amounts are $15,750 for single filers, $23,625 for Heads of Household, and $31,500 for married joint filers These amounts will adjust for inflation each year going forward. This increase means thousands more dollars of your income are tax-free off the bat. For example, a married couple now gets $31,500 off their income automatically – about a $3,800 increase over the 2024 amount – thanks to the bill. So even those who don’t have a lot of deductions to itemize will still benefit by paying less tax. (As a trade-off, personal exemptions remain eliminated, but the higher standard deduction and new senior deduction more than make up for it in most cases.)

  
  

How to use these: If you bought a new car with a loan, gather your 2025 interest statements from the lender to claim the interest deduction. If you usually take the standard deduction, the increase is automatic – just make sure you’re using the new 2025 amounts when calculating your taxes. If you’re close to the line of itemizing, the higher SALT cap might make it worth itemizing deductions now, so tally up those property tax and state tax bills. And seniors, be sure to claim your extra $6k (you’ll need to provide your Social Security number and, if married, file jointly to get it). These expanded deductions are slated to last through 2028 (SALT through 2029), so consider your multi-year tax planning accordingly.

3. Boost Your Family Benefits – Credits for Kids and New Savings Opportunities

Families stand to gain some valuable tax benefits under the new law – from a slightly larger child credit to new ways to save for education and even a new “Trump Account” for children. Here are the key family-focused changes:

• Bigger Child Tax Credit: Starting in 2025, the Child Tax Credit (CTC) is increased to $2,200 per qualifying child, up from the previous $2,000. That additional $200 per child will also adjust for inflation each year beginning in 2026, so the credit won’t lose value over time. The income phase-out thresholds remain the same ($200,000 single or $400,000 joint) and have been made permanent, as has the $500 credit for other dependents. The refundable portion of the CTC (up to $1,400 that you can get back as a refund if the credit exceeds your tax) continues and will be inflation-indexed too. This boost in the CTC puts more cash in the pockets of over 40 million families nationwide. For example, a family with two young children will get $400 more credit than before – a welcome increase come tax time.

• Expanded Education and Child Care Tax Benefits: The Big Beautiful Bill widens the scope of education and childcare incentives to help families. Notably, it expands 529 education savings plans – you can now use 529 funds for a broader range of education expenses, including certain K-12 materials or vocational/trade programs, not just college. This gives parents more flexibility to save tax-free for their kids’ education needs. The law also strengthens childcare support: it expands the Child and Dependent Care Credit and employer-provided Flexible Spending Accounts (FSAs) for childcare costs. For instance, the maximum dependent care FSA contribution is increased (from the long-standing $5,000 limit to $7,500, with inflation indexing) and the tax credit for childcare expenses will cover a higher percentage of expenses in future years. Additionally, the adoption tax credit was enhanced to encourage adoption – making a portion of it refundable up to $5,000 and increasing the maximum credit available. Timing note: Some of these childcare related changes kick in for 2026, but it’s good news to know as you plan ahead for daycare or adoption expenses. Overall, these measures will help many working parents better afford childcare and education by lowering their tax burden when those costs arise.

• “Trump Accounts” for Kids’ Savings: One entirely new feature is the creation of tax-advantaged savings accounts for children, nicknamed “Trump accounts.” These are essentially a special type of IRA that can be set up for a child under 18. Parents (or anyone) can contribute up to $5,000 per year into a Trump Account for a child, and the money grows tax-free inside the account. When the child turns 18, they can withdraw the funds (with some rules in place to discourage misuse). Even better – the government will make a one-time $1,000 contribution for children born between 2025 and 2028 to jump-start their savings. Essentially, for babies born in the next few years, Uncle Sam deposits $1,000 into a Trump Account in their name (as long as they meet the requirements). This is aimed at “building financial security from birth”. If you have a baby in this window (or expecting one), be sure to set up this account to snag that free $1k and start saving early. Even if your kids are older, contributing to a Trump Account could be a smart way to build a nest egg for them with tax-deferred growth. It’s like giving your child a head-start investment account, courtesy of the new law.

  
  

How to use these: Come tax season, claim the higher Child Tax Credit per child – your tax software or preparer will automatically apply the $2,200 amount for 2025. If you’re saving for education, consider beefing up or opening a 529 plan since you can use it more broadly now (e.g. private K-12 tuition or apprenticeships). For childcare costs, look into increasing your workplace Dependent Care FSA contributions in 2025 if available, knowing the cap is rising – that way you set aside more pre-tax dollars for daycare. And if you welcome a new baby (or have young kids under 18), ask your financial advisor or tax professional about establishing a Trump Account for them. Make sure to follow any guidance on qualifying for the $1,000 government seed deposit (such as registering the account properly). Taking advantage of these family-oriented provisions will help maximize your refunds and tax savings as your family grows.

Conclusion: Make the Most of the “Big Beautiful” Tax Changes

The One Big Beautiful Bill Act has ushered in a host of tax changes – from letting you exclude certain income and deduct new expenses, to locking in lower tax rates and higher credits. The examples above are some of the biggest money-savers you can leverage on your 2025 taxes. Every taxpayer’s situation is different, so you’ll want to plan and perhaps adjust your tax withholding or estimated payments to reflect these new breaks (so you don’t end up giving Uncle Sam an interest-free loan). It’s also worth noting a few time-sensitive opportunities. For instance, the bill ends some green energy tax credits soon – such as the electric vehicle credit and home solar credit, which expire after 2025. If you were considering buying an EV or installing solar panels, doing so in 2025 will be your last chance to claim those credits. Keeping track of such deadlines can save you thousands.

Feeling overwhelmed by the complexity? You’re not alone – with major tax reforms like this, it can be confusing to navigate what applies to you. That’s where professional guidance comes in. At Beaconshire Advisory, we’ve got expert tax advisors ready to help you navigate these new rules and identify every savings you’re entitled to. We can analyze your personal situation, ensure you qualify for the new deductions and credits, and help you plan moves (like timing big purchases or adjusting retirement contributions) to maximize your benefits under the Big Beautiful Bill. Don’t miss out on these valuable tax breaks – with smart planning and the right help, 2025 could deliver you a significantly lower tax bill and a bigger refund.

Ready to save more on your taxes? Get in touch with Beaconshire Advisory for personalized tax planning. We’ll make sure the new tax law’s changes truly live up to their “big” and “beautiful” promise for your wallet. Here’s to keeping more of your money in 2025 and beyond!