One, Big, Beautiful Bill provisions

 

The One, Big, Beautiful Bill Act significantly affects federal taxes, credits and deductions. It was signed into law on July 4, 2025, as Public Law 119-21, and takes effect in 2025.

Individuals

Standard deduction increases

Tax year 2026:

  • $32,200 for married couples filing jointly
  • $16,100 for single filers and married individuals filing separately
  • $24,150 for heads of household

Tax year 2025:

  • $31,500 for married couples filing jointly
  • $15,750 for single filers and married individuals filing separately
  • $23,625 for heads of household

Marginal rates for tax year 2026

  • 37% for income over $640,600 (single) or $768,700 (married filing jointly)
  • 35% for income over $256,225 (single) or $512,450 (married filing jointly)
  • 32% for income over $201,775 (single) or $403,550 (married filing jointly)
  • 24% for income over $105,700 (single) or $211,400 (married filing jointly)
  • 22% for income over $50,400 (single) or $100,800 (married filing jointly)
  • 12% for income over $12,400 (single) or $24,800 (married filing jointly)
  • 10% for income up to $12,400 (single) or $24,800 (married filing jointly)

Alternative minimum tax exemption amounts for tax year 2026

  • $90,100 for single filers (phased out at $500,000)
  • $140,200 for married couples filing jointly (phases out at $1,000,000)

Estate tax exclusion for tax year 2026

  • Basic exclusion amount is $15,000,000
  • Up from $13,990,000 for 2025 decedents

Adoption credit limits for tax year 2026

  • Maximum adoption credit is $17,670, which is higher than the $17,280 limit for 2025.
  • Up to $5,120 of this credit may be refundable.

Employer-provided childcare credit expansion for tax year 2026

  • Maximum amount increases from $150,000 to $500,000
  • Maximum increase to $600,000 if employer is an eligible small business

Related resources

Overview of the deduction

  • Effective 2025 through 2028, individuals age 65 and older may claim an additional $6,000 deduction.
  • This is in addition to the standard deduction for seniors available under existing law.
  • Applies per eligible individual (or $12,000 for a married couple if both spouses qualify).
  • Phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).

Who qualifies

  • You must be age 65 on or before the last day of the tax year.
  • Available for eligible taxpayers (both itemizing and non-itemizing).

How to claim the deduction

  • Include your Social Security number on the return.
  • File jointly, if you’re married.

Related resources

Overview of the deduction

  • Effective 2025 through 2028, employees and self-employed individuals may deduct qualified tips they received in occupations the IRS identified as “customarily and regularly receiving tips” on or before December 31, 2024, and are reported on a Form W-2, Form 1099, another statement furnished to the individual, or on Form 4137 if the individual directly reports the tips.
  • “Qualified tips” include voluntary cash or charged tips received from customers, including shared tips.
  • Maximum annual deduction is $25,000.
  • For self-employed individuals, deduction cannot exceed net income (before this deduction) from the trade or business where tips were earned.
  • Phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

Who qualifies

Individuals who:

  • Have a Social Security number (SSN)
  • Claim itemized or non-itemized deductions

Who doesn’t qualify

Individuals who are:

  • Self-employed in a Specified Service Trade or Business (SSTB) under Section 199A
  • Employees of an employer in an SSTB

How to claim the deduction

  • Include your Social Security number on the return
  • File jointly if you’re married

Reporting requirements

  • Employers and other payors must report certain cash tips and the occupation of the tip recipient on IRS (or SSA) information returns.
  • Treasury and IRS will provide penalty relief for tax year 2025.

Related resources

Overview of the deduction

  • Effective 2025 through 2028, individuals may deduct the portion of qualified overtime pay that exceeds their regular rate of pay (for example, the “half” portion of “time-and-a-half”).
  • Overtime must be reported on Form W-2, Form 1099, another statement furnished to the individual, or directly by the individual.
  • Maximum annual deduction is $12,500 ($25,000 for joint filers).
  • Phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

Who qualifies

Taxpayer who:

  • Have a Social Security number (SSN)
  • Claim itemized or non-itemized deductions

How to claim the deduction

  • Include your Social Security number on the return.
  • File jointly if you’re married.

Reporting requirements

  • Employers and other payors must report qualified overtime compensation on IRS (or SSA) information returns.
  • Treasury and the IRS will provide transition relief for tax year 2025.

Related resources

Overview of the new deduction

  • Effective 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle for personal use that meets other eligibility criteria. Lease payments do not qualify.
  • Maximum annual deduction is $10,000.
  • Phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers).

What counts as qualified interest

Interest must be paid on a loan that:

  • Originated after December 31, 2024
  • Was used to purchase a vehicle originally used by the taxpayer
  • Was secured by a lien on the vehicle
  • Was for a personal-use (nonbusiness) vehicle

If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction.

​​​What counts as a qualified vehicle

A qualified vehicle is a car, minivan, van, SUV, pickup truck or motorcycle that:

  • Has a gross vehicle weight rating of less than 14,000 pounds
  • Underwent final assembly in the United States.

To verify final assembly, check one of these:

Who qualifies

  • Available to both itemizing and non-itemizing taxpayers.
  • You must include the VIN on your return for any year you claim the deduction.

Reporting requirements

  • Lenders or other recipients of qualified interest must file information returns with the IRS and provide statements to taxpayers showing the total amount of interest received during the taxable year.

Related resources

Families and dependents

Overview of the change

  • Beginning tax years after December 31, 2024, up to $5,000 (indexed for inflation) of the adoption credit may be refundable.
  • Any credit amount carried forward from prior years cannot be used to calculate the refundable portion.

Businesses

Transition relief overview

IRS provides transitional relief for tax year 2025 for lenders and other recipients of qualified interest who must file information returns with the IRS and provide statements to borrowers showing the total amount of interest received on qualified passenger vehicle loans and other relevant information

How the relief applies for 2025

  • Applies to reporting requirements under the One, Big, Beautiful Bill for qualified passenger vehicle loans.
  • Lenders and other payors should refer to Notice 2025-57 and other related guidance to determine how the 2025 reporting rules apply.

Related resources

Overview of the limitation

  • The One Big, Beautiful Bill Act limits credits and refunds for employee retention  credits (ERC) claimed for the third and fourth quarters of 2021 that were filed after January 31, 2024.
  • IRS FAQs provide general information, including when a claim was timely filed and what appeal rights apply if an ERC claim is disallowed.

Related resources

Investment and community development

Overview of Opportunity Zones

  • In 2018, certain economically distressed census tracts in the United States and its territories were designated as Qualified Opportunity Zones (QOZs) by the Treasury Department.
  • Taxpayers investing in QOZs receive certain tax benefits as an incentive to support economic growth and job creation in these underserved communities.

Rural area definition under the One, Big, Beautiful Bill Act

  • A rural area is any area other than a city or town with a population greater than 50,000, and any urbanized area contiguous and adjacent to such a city or town.
  • This definition applies to states, the District of Columbia and U.S. territories.

Changes to substantial improvement requirements

  • Beginning July 4, 2025, The Act reduced the substantial improvement threshold from 100 percent to 50 percent for required additions to the basis for property located entirely in rural QOZs.

Related resources

Clean energy

Overview of credit expirations
The Act accelerates the end of several clean vehicle credits:

  • New Clean Vehicle Credit (30D): Not allowed for any vehicle acquired after September 30, 2025
  • Used Clean Vehicle Credit (25E): Not allowed for any vehicle acquired after September 30, 2025.
  • Qualified Commercial Clean Vehicle Credit (45W): The credit will not be allowed for any vehicle acquired after September 30, 2025.

Related resources

Overview of credit expirations
The Act accelerates the end of the following home and residential energy credits:

  • Energy Efficient Home Improvement Credit (25C): Not allowed for any property placed in service after December 31, 2025.

  • Residential Clean Energy Credit (25D): Not allowed for any expenditures made after December 31, 2025.

Related resources

Tax exempt entities and charitable giving

Overview of the change

  • The Act recognizes Indian tribal governments for purposes of determining whether a child has special needs for the adoption tax credit.
  • Provides parity with state governments, by giving tribal governments the same ability to determine whether a child has special needs for purposes of the adoption tax credit.

Related resources

Other taxes

Overview of the excise tax
Beginning January 1, 2026, remittance transfer providers must:

  • Collect the 1% excise tax on applicable remittance transactions when the sender pays with cash, a money order, a cashier’s check, or a similar physical instrument.
  • Make semimonthly deposits.
  • File quarterly returns with the IRS.

Important details

  • The first semimonthly deposit is due January 29, 2026.
  • Treasury and the IRS will provide limited penalty relief. This relief applies for the first three quarters of 2026 under Treasury and IRS guidance. Providers may avoid deposit penalties if they make timely deposits (even if the amount is later adjusted) and pay any underpayment by the due date of the applicable quarterly return (Form 720). Safe-harbor rules under excise-tax regulations may also apply.

Related resources

 

Resources

Guidance

Find IRS guidance on key tax provisions in the One, Big, Beautiful Bill.

Page Last Reviewed or Updated: 11-Dec-2025