Tax savings with the "One Big Beautiful Bill" (OBBBA) vary widely, with projections showing average cuts around $611 (0.8% increase in income) for 2026 but much larger for specific groups, like potentially $300-$1,000 more in refunds, bigger deductions for seniors (up to $6k/$12k), tax-free tips for many workers (avg. $1,300/year), and larger Child Tax Credits, benefiting middle-income families most while some higher earners might see tax increases, according to Tax Foundation analysis.
Provision details: The BBB enacted permanent cuts to all marginal tax rates except the lowest marginal rate. In particular, it reduced the top marginal income tax rate from 39.6 percent to 37 percent. This provision can be expected to cost about $340 billion through 2034.
President Donald Trump's "big beautiful bill" increased the SALT deduction limit to $40,000 for 2025, up from $10,000 in 2024.
Yes. The no tax on overtime bill was included in the One Big Beautiful Bill that President Trump signed into law in July 2025.
Income tax rates
The legislation generally makes permanent the seven rates created by the TCJA, with an initial inflation adjustment in 2026 for the first two brackets (10%, 12%). The permanent brackets are: 10%, 12%, 22%, 24%, 32%, 35% and 37%.
Qualified overtime compensation (QOC) is now exempt from federal income taxes, up to $12,500 (single filers) and $25,000 (joint filers) dependent on your modified adjusted gross income (MAGI). You'll still owe payroll tax (i.e., Social Security and Medicare taxes) and possibly state and local taxes.
Yes, it is illegal to intentionally not pay federal taxes, as the U.S. tax system requires compliance, and failing to pay can lead to severe civil penalties (fines, interest, wage garnishment) and criminal charges (tax evasion, imprisonment), even if the system is described as "voluntary" due to self-assessment. While simple failure to file due to oversight might result in penalties, deliberate evasion, underreporting income, or making frivolous legal arguments against paying are criminal offenses.
To qualify for the temporary $40,000 State and Local Tax (SALT) deduction (for tax years 2025-2029), you must be a homeowner or resident of a high-tax state, itemize deductions on Schedule A, pay over $10,000 in state/local income/sales/property taxes, and have a Modified Adjusted Gross Income (MAGI) below the phase-out threshold (starts phasing out over $500,000 MAGI for most filers). This temporary increase allows more itemizers to exceed the standard deduction, saving on federal taxes, particularly in states like NY, CA, NJ.
You can't entirely avoid taxes on a bonus, but you can significantly lower the amount by contributing to tax-advantaged accounts (401(k), IRA, HSA), deferring the bonus to a year you expect to be in a lower tax bracket, or making charitable donations, thereby reducing your taxable income or increasing deductions at tax time.
Bonuses under $1 million are typically taxed at a flat rate of 22%. Example: If you receive a bonus of $20,000, the flat federal tax rate of 22% would amount to $4,400. If you receive a bonus above $1 million, you'd pay the 22% rate on the first million. Beyond that, the rate jumps to 37%.
President-elect Donald Trump campaigned on lowering the US corporate income tax rate to 15 percent. He made the same request in 2017 when Republicans passed their tax cuts, but Congress only cut the federal rate to 21 percent—down from the worldwide high of 35 percent.
The federal tip deduction (also known as “No Tax on Tips”) was enacted as part of the “One Big Beautiful Bill,” which was signed into law on July 4, 2025. The deduction is codified as Section 224 of the federal tax code. Read about other tax law changes in the “One Big Beautiful Bill.”
The IRS 7-year rule primarily applies to keeping records for claiming a deduction for bad debts or losses from worthless securities, allowing a longer period to file for a credit or refund, but it's not a universal audit limit; it's often a recommended safe buffer for general record-keeping, with the standard IRS audit period usually being 3 years, extending to 6 years for substantial income omission (over 25%) or foreign income issues, and indefinitely for fraud.
One-time forgiveness, officially known as First-Time Penalty Abatement (FTA), is an IRS program that allows qualified taxpayers to have certain penalties removed from their tax accounts.
The new senior tax deduction of up to $6,000 for single filers and $12,000 for joint filers, was created to help cover taxes on Social Security benefits. Taking the new senior deduction helps to reduce your taxable income, which can mean less tax or potentially an even bigger tax refund when you file your return.
If the only income you receive is your Social Security benefits, then you might not have to file a federal income tax return. The One Big Beautiful Bill provides for an additional $6,000 Senior Deduction for those 65 and over for tax years 2025 through 2028.
No tax on tips or overtime bill advances in Assembly with bipartisan support. Assembly lawmakers approved a bill Thursday to eliminate income taxes on cash tips and some overtime work, reflecting provisions established nationally by President Donald Trump's administration and embraced by lawmakers from both parties.
The $6,000 senior deduction is in effect from tax years 2025 through 2028. It applies to taxpayers 65 and over, regardless of whether they itemize their tax returns or take the standard deduction.