07/04/2025
https://www.congress.gov/bill/119th-congress/house-bill/1/text
An Independent Review of the Big Beautiful Bill (BBB) by Marc Friedman
Between the news media and the endless stream of e-mails and texts that people have received touting what this bill brings to the us as taxpayers I thought it prudent to read all 800 + pages and summarize what I feel are the subjects that will most affect my clients, friends and family. So here goes..., and please excuse the details if the details bore you...
1. The SALT Tax Deduction
The Limit on the SALT Tax Deduction goes up to a $40,000 deduction BUT there is a big caveat:
- If your Modified Adjusted Gross Income (MAGI) is greater than $500K in 2025, then the SALT Deduction is reduced by 30% of each dollar that exceeds $500K.
- Using the above, if your MAGI is $600K in 2025 then $600K minus $500K equals $100K. Multiply by 30% equals $30K. The 30K is then subtracted from the 40K deduction limiting your SALT tax deduction to $10,000.
- NOTE: The SALT Tax Limitation can NOT reduce the deduction to less than $10,000, no matter your MAGI per the Big Beautiful Bill..
2. Tax on Tips
The No tax on tips has several caveats that everyone affected should be aware as there are limitations.
- The IRS will be developing a list of types of jobs that will qualify for a deduction on tips by December 31, 2025.
- The BBB identifies the following types of jobs:
- Delivery or Providing Food or Beverages for consumption.
- Barbering / Hair Care
- Nail Care
- Esthetics
- Spa Treatment
If your job isn't on this list please wait for the IRS to develop the complete list of covered jobs. It will be out by 12/31/25
- The Maximum Deduction allowed for tips is $25,000
- The Deduction is reduced $100.00 for every $1000.00 the taxpayer Modified Adjusted Gross Income (MAGI) is over $150,000 (Individuals) / $300,000 (Married Filing Jointly)
3. Tax on Overtime
The Maximum Deduction allowed for overtime is $12,500 for Individual taxpayers and $25,000 if Married Filing Jointly. Again the following is a caveat:
- The deduction for overtime is reduced $100.00 for every $1000.00 that the taxpayer MAGI exceeds $150,000 for Individuals and $300,000 for Married Filing Jointly.
4. Car Loan Interest Deduction
The Maximum Deduction allowed for car loan interest is $10,000. Again the following is a caveat:
- The deduction for car loan interest is reduced $200.00 for every $1,000 that the taxpayer MAGI exceeds $100,000 for Individuals and $200,000 for Married Filing Jointly
5. Charitable Cash Deductions
Cash Contributions to Qualified Charities even if the taxpayer is NOT itemizing deductions are back for the 2025 tax year! There is a limit of $1,000 for Individuals and $2,000 if Married Filing Jointly.
6. The Senior Deduction (Also being referred to as no tax on Social Security)
To be clear the senior deduction is NOT an elimination of tax on Social Security. Rather, for those that qualify it provides for an increase in your Standard Deduction. The following are the caveats for this increase in your Standard Deduction:
- The Taxpayer MUST be 65 or older (or turned 65 during the taxable year)
- The Senior Deduction is reduced by 6% of the Taxpayers MAGI that exceeds $75,000 (Individual) / $150,000 (Married Filing Jointly)
- The Senior Deduction is eliminated if your Modified Adjusted Gross Income exceeds $175,000 (Individual) / $250,000 (Married Filing Jointly).
- If the Taxpayer Itemizes Deductions there is NO Senior Deduction. There's no double dipping.
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