With the One Big Beautiful Bill Act (OBBBA) now fully in effect, much attention has gone to the big-ticket items like permanent TCJA extensions and standard deduction boosts. But buried in the legislation are several targeted provisions that fly under the radar yet offer real savings—especially for workers in service industries, those putting in extra hours, and seniors. These temporary rules (mostly running through 2028) are designed to put more money in pockets now, and acting before year-end can amplify the benefits.
Spotlight on Worker-Friendly Deductions
OBBBA introduces two brand-new above-the-line deductions aimed at everyday earners:
• No Tax on Tips: Qualified tip income is fully deductible for federal taxes (up to certain limits based on industry norms). This applies retroactively to 2025 wages, meaning service workers—like restaurant staff, bartenders, and delivery drivers—can exclude tips from taxable income. Pair this with proper tracking via Form W-2 updates from employers.
• Overtime Pay Deduction: A deduction of up to $12,500 ($25,000 for joint filers) for qualified overtime compensation. This phases out for higher earners (starting at $150,000 single/$300,000 joint modified AGI) but provides meaningful relief for blue-collar workers, first responders, and others clocking extra shifts. Note: This is for FLSA-eligible overtime; voluntary “bonus” overtime may not qualify.
These aren’t permanent, so maximize eligible income this year and consult payroll for accurate reporting.
Senior-Specific Boosts
For taxpayers 65+, OBBBA adds a temporary $6,000 additional deduction ($12,000 joint) on top of the standard amount, phased out at higher incomes. This stacks with QCDs and can push many seniors further into lower brackets.
Other Hidden Gems
• Non-Itemizer Charitable Deduction: Starting 2026, up to $1,000 ($2,000 joint) for cash donations—even if you take the standard deduction. But for 2025, bunch gifts into a DAF to itemize and exceed thresholds under current rules.
• Vehicle Interest Deduction: New deduction for interest on loans for new vehicle purchases, encouraging domestic buys.
These provisions complement broader OBBBA changes without overlapping the core extensions. Run scenarios now: A tipped worker claiming both tips and overtime could see five-figure federal savings.
As always, these are general insights—personalized advice from a tax pro is essential. What’s one OBBBA surprise that’s caught your eye? Share in the comments!
Sources: IRS OBBBA Guidance; Tax Foundation Analysis (2025). Not personalized advice.
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