by Stephen Reed | Accounting News, News, Newsletter, Tax, Tax Planning, Tax Planning - Individual, Tax Preparation - Individual
President Trump’s One Big Beautiful Bill (OBBB) could change your tax return in real ways. The bill offers potential relief for parents raising kids, workers earning tips or overtime, and seniors on fixed incomes. There are a few key areas to pay attention to. Here’s what to know.
No Taxes on Tips
When tips are counted as taxable income, it decreases take-home pay, and there’s a chance you could get pushed into a higher tax bracket. The OBBB created a temporary deduction for tips up to $25,000 through tax year 2028, whether you itemize or claim the standard deduction on your return. If your modified adjusted gross income (MAGI) is greater than $150,000 ($300,000 for married couples filing jointly), the tip deduction gradually phases out. Keep in mind that tips are still subject to payroll taxes and may also be taxed at the state or local level.
No Taxes on Overtime
When Trump was campaigning, he pitched “no taxes on overtime” as a win for blue-collar workers, and it is. Workers can deduct up to $12,500 in overtime ($25,000 for joint filers). For a worker making $25 an hour who logs 10 overtime hours, that’s an extra $375 before taxes. Over time, those overtime hours can make a big difference in take-home pay. As with “no taxes on tips,” the deduction phases out with MAGIs greater than $150,000. And workers should remember that the exemption applies only to true overtime, not bonuses.
Bigger Tax Breaks for Seniors
Under the OBBB, if you’re 65 or older as of December 31, 2025, and making less than $75,000 a year, you get an extra $6,000 standard deduction (up to $12,000 for married couples filing jointly). That’s on top of the usual standard deduction. The deduction is gradually reduced if your MAGI exceeds $75,000 ($150,000 for married couples filing jointly) and is completely phased out at $175,000 ($250,00 for married couples filing jointly). Again, this is active from tax years 2025-2028.
Car Loan Interest Deductible
In a nod to middle-class families who rely on cars for work and everyday life, the OBBB allows individuals to deduct interest on auto loans. Effective from 2025-2028, it applies to new and used cars for personal use. For those financing a car, especially in today’s high-interest rate environment, this can provide real savings.
Expanded Child Tax Credit
The OBBB also increases the child tax credit from $2,000 to $2,200, and it will be adjusted annually for inflation beginning in 2026. Phaseout thresholds are $200,000 for single filers and $400,000 for married couples filing jointly.
Critics of the OBBB say the measures discussed above will add to the deficit, but for the average taxpayer, these deductions could mean a bigger refund or a smaller tax payment.
by Amanda O'Brien | Accounting News, News, Newsletter
Health savings accounts (HSAs) are one of the best tools for saving on healthcare costs. And beginning this year, more Americans than ever will qualify for HSAs, thanks to the One Big Beautiful Bill (OBBB), which was passed last July. Read on to learn what’s changing, who qualifies, and how these updates could offer savings on healthcare costs.
What Is an HSA?
An HSA is a special type of savings account Americans can use to pay for qualified medical expenses. Contributions are tax-deductible, the money grows tax-free, and withdrawals are tax-free for qualified medical expenses. Unlike flexible spending accounts (FSAs), HSAs don’t have a “use it or lose it” rule, so your funds roll over each year. And you keep the account even if you change jobs or retire. Until now, HSAs have been available only to people enrolled in high-deductible health plans (HDHPs), but the OBBB changed that.
Bronze and Catastrophic ACA Health Plans Now Qualify
As of January 1, 2026, anyone enrolled in a bronze or catastrophic health plan sold through the Affordable Care Act (ACA) marketplace now qualifies for an HSA plan. Before, these plans didn’t meet the IRS’s strict HDHP requirements. This update opens the door for millions more people, especially younger adults and people who choose lower-premium coverage, to start saving for healthcare expenses.
Direct Primary Care Now Covered
Under the OBBB, people using Direct Primary Care (DPC) can now pair it with an HSA. DPC is a subscription model where patients pay a monthly fee to a doctor or practice for unlimited primary care visits. Now, as long as the fee stays under $150 per month for individuals (under $300 for families), HSA funds can be used to pay for those services. This gives patients more flexibility and control over their healthcare budgets.
Telehealth Services No Longer Disqualify Patients for HSA Eligibility
In the past, if a patient’s HDHP covered telehealth visits before they met the deductible, it could wipe out their HSA eligibility for the year. However, the OBBB allows HDHPs to cover telehealth visits before the deductible is met. That means a patient’s health plan can cover virtual doctor visits upfront (or with a small copay), and they can still contribute to their HSA. Patients are no longer forced to choose between the convenience of telehealth and their savings goals.
These updates make HSAs more accessible, especially at a time when healthcare costs are on the rise, and more patients are using telemedicine. An HSA can build a cushion for future costs, making it an often overlooked retirement savings vehicle.
by Amanda O'Brien | Accounting News, News, Newsletter, Tax, Tax Planning, Tax Planning - Individual
President Trump’s One Big Beautiful Bill (OBBB) introduced several tax changes designed to boost take-home pay and simplify the tax code. Some major adjustments include nontaxable income, gift limits, estate tax exemption, and overtime deductions. Here’s a look at these changes and how they could affect your taxes.
Nontaxable Income
Nontaxable income is income that is excluded from federal taxation by the IRS. Some examples include child support, alimony, workers’ compensation, financial gifts, disaster relief payments, and Roth IRA contributions (not gains). In an effort to simplify tax filings and increase take-home pay for workers, the OBBB broadens the scope of what is treated as “nontaxable” for certain types of income, specifically tips and qualified overtime.
Overtime Pay
Before the OBBB, overtime pay was fully taxable. It was counted as part of a worker’s regular wages for federal income tax. The OBBB implemented a deduction of up to $12,500 ($25,000 for joint filers) in overtime pay. This lowers taxable income for hourly and shift workers. However, this deduction is only valid from 2025 through 2028.
The deduction phases out above $150,000 MAGI (modified adjusted gross income) for single filers and $300,000 for joint filers.
Tip Income
Under the OBBB, eligible workers can deduct up to $25,000 annually from taxable income for “qualified tips.” To qualify, tips must be paid via cash, check, debit or credit card, or electronic payments through an app. Again, this is valid from 2025 through 2028, and tips are still subject to Social Security and Medicare taxes.
It’s important to point out that automatic gratuities, such as those added to large parties, are not considered voluntary, so they won’t qualify for the deduction.
Gift Limits
The annual federal gift tax exclusion increased from $18,000 to $19,000 per individual, meaning a financial gift up to that amount won’t trigger taxes or filing requirements for the benefactor or the recipient.
Estate Tax Exemption
The federal estate tax exemption is the amount that can be passed to heirs without federal estate tax. Beginning in 2026, this amount is increasing from $13.99 million to $15 million per person. This means that married couples can shield up to $30 million from federal estate tax. This exemption is permanent and is tied to inflation, so the limit will rise over time, giving families the ability to pass on more wealth tax-free.
With the OBBB legislation, lawmakers set out to make the tax code simpler and more worker-friendly, with more income treated as nontaxable or deductible, higher gift and estate tax thresholds for family wealth transfers, and some relief for overtime earners and tip workers. It’s not a total overhaul, but these changes could lead to a less painful tax season for some taxpayers.
by Daniel Kittell | Accounting News, Business Growth, News, Newsletter, Small Business
Small businesses are finally seeing signs of life after a rocky few years. Since January, average earnings have climbed by 75%. That’s an encouraging statistic, yet monthly revenues still lag behind the record highs of the past two years. This signals that progress is happening, but it’s not yet a full recovery. Read on as we go over what’s behind this upswing.
Tariffs: A Double-Edged Sword
Trump’s motive for implementing tariffs is to protect American manufacturing, but for small businesses that rely on imports, it’s been a mixed bag. Materials and products often cost more, which narrows already-slim margins. Some businesses have had to raise prices, cut expenses, and renegotiate supply agreements just to stay competitive.
How businesses are coping:
- Renegotiating contracts with suppliers
- Passing modest price increases to customers
- Narrowing focus to their most profitable products
While companies are being resourceful, uncertainty around future trade policy means small businesses are remaining cautious.
The One Big Beautiful Bill Offers Stability
The newly passed One Big Beautiful Bill provides some long-term stability by making small business tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA) permanent. Until now, uncertainty loomed over whether those tax benefits would expire, which threw a wrench into long-term planning for small businesses.
Why the permanence of the TCJA tax cuts matters:
- Owners can plan investments with more confidence
- The law simplifies the tax code, leaving fewer surprises
- The law also reduces compliance requirements, saving time and energy
These changes won’t automatically boost sales, but they do give business owners a more stable and predictable foundation to work from.
Interest Rate Cuts Predicted
Economists expect at least one rate cut this year. If that happens, borrowing could get less expensive for small businesses. Lower rates would lower the cost of financing new equipment, pursuing expansion opportunities, or even short-term cash-flow needs during slower seasons.
If rates are cut as expected, the combined benefits of cheaper financing, permanent tax relief, and the earnings growth seen since January could help propel recovery into 2026.
Balancing Optimism with Caution
The 75% jump in earnings since January is a great sign, but small businesses still face challenges, especially with high supply costs, persistent labor shortage, and unpredictable global markets. And if inflation rises or trade tensions flare up, consumers could start spending less.
Even with tariffs and ongoing uncertainty, the 75% earnings statistic indicates the resiliency of small businesses. By staying flexible, diversifying revenue sources, and preparing to adjust as needed, many small businesses are not just navigating the recovery process but also positioning themselves for growth opportunities.
by Stephen Reed | Accounting News, Business Growth, News, Newsletter, Small Business
As small business owners face continued inflation and rising tariffs, the One Big Beautiful Bill Act (OBBB) could provide critical financial relief for Main Street businesses. By extending key provisions from the Tax Cuts and Jobs Act of 2017 (TCJA), the legislation aims to stabilize jobs, simplify taxes, and encourage long-term investment in growth. Read on as we discuss how the OBBB could affect small businesses.
How the 2017 TCJA Has Helped Small Businesses
The Tax Cuts and Jobs Act, passed in 2017, introduced a number of changes that gave small businesses some breathing room. It expanded deductions for everyday business expenses, simplified some accounting rules, and offered new incentives for research and development. With those savings, many small business owners were able to put more money back into their operations—hiring staff, upgrading equipment, or simply staying competitive in a tough market.
One of the most important parts of the TCJA was the tax break it gave to pass-through businesses and sole proprietors, which make up a big chunk of the small business world. For many owners, those savings meant they could afford to hire more people, raise wages, or offer better benefits. In tough economic times, it often meant the difference between staying open or shutting the doors for good.
Why Extending TCJA Provisions Matters Now
Good news for small business owners: the OBBB Act brings back several tax breaks from the TCJA that are set to expire. With inflation driving up the cost of everything from supplies to labor, and tariffs squeezing profits, these extended tax benefits could help ease the financial strain and make it easier for businesses to keep their employees on payroll.
According to the House Ways and Means Committee, keeping the 2017 tax cuts in place could help protect around 6 to 7 million full-time jobs, most of which fall within the small business sector. On the other hand, letting these provisions expire could lead to a net loss of 6 million full-time positions. That would be a blow to the small businesses that drive innovation and employment.
Protecting Jobs and Supporting Growth
Tax policy is a budgeting tool for business owners who are trying to plan for the future. Without continued relief, small businesses might have to scale back operations, delay any expansion plans, or cut jobs. This could weaken the role of small businesses as a major source of job creation in the U.S., especially at a time when inflation is already making it harder for both households and businesses to manage their budgets.
Keeping the most effective elements of the TCJA under the OBBB Act would give small business owners the confidence and financial stability to maintain their workforce and pursue long-term investment strategies. These elements include maintaining deductions for new equipment, continuing R&D tax credits, and keeping simplified tax filing thresholds in place—all of which help to reduce administrative burdens and free up capital for growth.
A Lifeline for American Small Businesses
Whether it’s retaining employees, investing in new equipment, or expanding into new markets, the tax breaks carried over from the TCJA through the OBBB Act could give small businesses the stability they need to navigate current challenges and plan for long-term growth.
