Wayne R Thompson CPA

The IRS is providing implementation guidance on the One, Big, Beautiful Bill. Below are the expansions and changes to deductions affecting taxpayers as they prepare for the filing season.

The standard deduction increases for tax year 2026, to:
$32,200 for married couples filing jointly
$16,100 for single filers and married individuals filing separately
$24,150 for heads of household

Deduction for Seniors:
Additional $6,000 per taxpayer aged 65 or older
$12,000 if both spouses qualify
Phase-out begins at modified adjusted gross income of:
$75,000 for single filers
$150,000 for joint filers

Overtime deduction:
It applies only to the overtime premium portion of wages
Modified adjusted gross income caps annually at:
$12,500 for single filers
$25,000 for joint filers

Tips deduction for tax year 2026:
Up to $25,000 of qualified tip income is deductible
Phase-out begins at modified adjusted gross income of:
$150,000 for single filers
$300,000 for joint filers

Car loan interest deduction:
Effective 2025 through 2028
Up to $10,000 per year for interest on qualified new vehicle loans
Phase-out begins at modified adjusted gross income of:
$100,000 for single filers
$200,000 for joint filers

Here’s a bullet-point summary of the key individual and business provisions in the "Big Beautiful Bill":

🧾 Individual Taxpayer Provisions
Permanent Lower Tax Rates

Makes 2017 tax cuts permanent (e.g., 39.6% → 37%, 25% → 22%, 15% → 12%).

Estimated $2 trillion back to taxpayers over a decade.

Permanent Higher Standard Deduction

Standard deduction increases (originally doubled in 2017) made permanent.

Saves taxpayers ~$1 trillion over the next decade.

Increased SALT Deduction Cap

State and Local Tax (SALT) cap temporarily raised from $10,000 to $40,000 through 2029.

New Car Loan Interest Deduction

Deduct up to $10,000 of car loan interest on new, American-made vehicles (through 2028).

Income limits apply.

Increased Child Tax Credit

Increased from $2,000 to $2,200 per child.

Phases out at $200K (single) / $400K (married).

Higher Senior Deduction

Increased from $2,000 to $6,000 per senior (or $3,200 to $6,000 if married).

No Tax on Overtime Deduction

Deduction of up to $12,500 (single) / $25,000 (married) against overtime income.

Phases out at $150K/$300K income.

No Tax on Tips Deduction

Deduction up to $25,000 on qualified tip income.

Applies to hospitality, personal care, retail—not to specialized professions (e.g., doctors, lawyers).

💼 Business Tax Provisions
Permanent QBI Deduction

20% deduction for qualifying business income made permanent.

Income thresholds increased by $25K–$50K.

100% Bonus Depreciation

Immediate write-off for tangible business assets (vehicles, machinery, etc.) extended permanently.

100% R&D Expensing

Full write-off for qualifying research and development costs.

Extended Opportunity Zone Credit

Continued ability to defer/avoid capital gains tax via Opportunity Zone investments.

Criteria for Deductible Business Travel

For travel expenses to be recognized as deductible by the IRS, they must satisfy several criteria, the most important is as follows:

Ordinary and Necessary - The expense should be common and accepted in your field and industry. For example, if attending conferences is a standard part of business operations in your sector, the costs associated with such events are typically considered ordinary and necessary.