07/06/2025
Now that the OBBB (otherwise known as H.R. 1) has passed and has been signed into law; here are some key tax changes that will impact some of my tax clients; in a good way.
1. Although unable to include no tax on social security in this bill; there is a temporary $6,000 tax deduction for those on social security that meet certain criteria. This is huge for a large number of my clients. For some it will completely eliminate taxable income; for others, it will reduce the amount of tax to be paid.
2. No tax on qualified tips starting with the 2025 tax returns. This will be an adjustment to income (without having to itemize) for qualified tips received during the year that are included in income, up to $25,000.
For example: if a bartender receives tips, but does not report them to their employer and they are not included on the W-2 at year-end; then they will NOT receive a deduction on their tax return.
IF the taxes are reported and included on the W-2; then there will be a tax deduction allowed.
Tip credit is available for the food service industry, bars/restaurants, barbering and hair care, nail care, esthetics; and body and spa treatments.
Tax on overtime - Up to $12,500 ($25,000 for Married Filing Joint) can be claimed as an adjustment to income for overtime included on the tax return.
I will post additional information related to tax returns and tax planning as I receive and digest more information from this tax bill.
For those interested in reading the tax bill yourself; it can be found by going to Congress.gov, entering HR1 in the Search box; then click on the Text tab and choose the Engrossed by the Senate Version.
