The One Big Beautiful Bill Act, worked out
Four 2025 practice returns, one for each headline deduction the One Big Beautiful Bill Act created. Every figure was prepared and verified line by line in professional tax software. Each new deduction lands on the brand-new Schedule 1-A and comes off on top of the standard deduction, for tax years 2025 through 2028.
The One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) created four new individual deductions that most taxpayers meet for the first time on their 2025 return. They are claimed on a new form, Schedule 1-A, and are available whether or not you itemize, so they reduce taxable income in addition to the standard deduction. Each return below is a clean, single-issue scenario anchored to a no-income-tax state, so the whole focus is the new provision.
No Tax on Tips
A single restaurant server in Miami whose W-2 includes reported tips. The new deduction lets her take her qualified tips back out of taxable income, up to $25,000, on top of the standard deduction.
No Tax on Overtime
A warehouse worker in San Antonio who logs a lot of overtime. Only the overtime premium, the half of time-and-a-half, is deductible, up to $12,500 for a single filer.
No Tax on Car Loan Interest
A tech worker in Austin who bought a new, US-assembled car in 2025 and financed it. The interest on the loan is deductible, up to $10,000 a year, as long as the vehicle qualifies.
The $6,000 senior deduction
A 68-year-old retiree in Naples. The new $6,000 senior deduction stacks on top of both the regular standard deduction and the existing age-65 additional standard deduction.
The caps and phase-outs, at a glance
Each deduction has its own cap and its own income phase-out. The returns above all keep income under the phase-out so the full deduction applies; the figures are current for 2025.
- Tips: up to $25,000, phasing out above $150,000 of modified AGI ($300,000 if married filing jointly). The occupation must customarily receive tips, and the employer must not be a specified service trade or business.
- Overtime: up to $12,500 single ($25,000 jointly), phasing out above $150,000 / $300,000. Only the FLSA premium counts, not the full overtime pay.
- Car loan interest: up to $10,000, phasing out above $100,000 / $200,000. The vehicle must be new, for personal use, with final assembly in the United States, on a loan originated after December 31, 2024 and secured by a lien. Leases do not qualify.
- Senior deduction: $6,000 per person 65 or older (born before January 2, 1961), phasing out at 6% of modified AGI over $75,000 single / $150,000 jointly. It is separate from, and on top of, the age-65 additional standard deduction.
All taxpayers, employers and documents in these returns are fictional and for education only. This page is informational and is not tax advice.