OBBBA Tax Guide 2026: Everything in the One Big Beautiful Bill Act
The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, is one of the largest tax relief packages for working Americans in decades. It creates four new above-the-line deductions — no tax on tips, no tax on overtime, a car loan interest deduction, and a $6,000 senior bonus deduction — all claimed on the new Schedule 1-A. Use this guide to understand every provision and calculate your exact savings.
The Four OBBBA Deductions
No Tax on Tips
Tip income is now 100% deductible from federal income tax for tipped workers.
No Tax on Overtime
Overtime premium pay is exempt from federal income tax for FLSA hourly workers.
No Tax on Car Loan Interest
Deduct the interest you pay on auto loans for new vehicle purchases made in the US.
Senior Deduction ($6,000)
Americans aged 65 and older receive an additional $6,000 above-the-line deduction.
Schedule 1-A: One Form for All Four Deductions
All four OBBBA deductions are reported on a single new IRS form — Schedule 1-A. This means you file one attachment to your Form 1040 to claim every benefit you qualify for. You do not need to itemize to claim these deductions — they are above-the-line, meaning they reduce your adjusted gross income (AGI) regardless of whether you take the standard deduction.
Use our Schedule 1-A calculator to fill out all four sections at once, or read the detailed Schedule 1-A filing guide to understand each line.
Who Benefits Most from the OBBBA?
Timeline: 2025–2028
All four OBBBA deductions are temporary. They apply to tax years 2025 through 2028 only. Unless Congress passes new legislation to extend them, every provision expires after the 2028 tax year. That gives you four filing seasons to maximize your savings — starting now.
Complete OBBBA Calculator Suite
Every tool you need to calculate your savings under the One Big Beautiful Bill Act:
No Tax on Tips Calculator
Enter your tip income and tax bracket to see your exact federal savings.
No Tax on Overtime Calculator
Calculate OT tax savings by hourly rate, hours, and filing status.
Car Loan Deduction Calculator
See how much your auto loan interest deduction reduces your tax bill.
Senior Tax Deduction Calculator
Calculate your $6,000 senior deduction savings with your income and bracket.
Schedule 1-A Calculator
Claim all four deductions at once — one form, total savings summary.
Tip & Tax Calculator
Calculate tip and tax on any restaurant bill — split checks too.
Related Guides & Blog Articles
OBBBA 2026: What the Tip Tax Exemption Means for Restaurant Workers
Who qualifies, how much you save, and how to claim it on your return.
Read article →No Tax on Overtime: Which Workers Benefit Most in 2026?
Industry-by-industry breakdown with real paycheck math.
Read article →How to File Schedule 1-A: Step-by-Step for All Four OBBBA Deductions
Line-by-line instructions so you don't miss a dollar of savings.
Read article →State-by-State: How OBBBA Interacts with Your State Income Tax
Where does the federal exemption go furthest? All 50 states ranked.
Read article →Frequently Asked Questions
What is the OBBBA?
The One Big Beautiful Bill Act (OBBBA) is a federal tax law signed in 2025 that creates four new above-the-line deductions: no tax on tips (up to $25,000/year), no tax on overtime pay for FLSA hourly workers, a deduction of up to $10,000 per year in interest on new US-made vehicle loans, and a $6,000 bonus deduction for Americans aged 65 and older. It is one of the most significant expansions of working-class tax relief in decades.
When does the OBBBA take effect?
All four provisions apply starting with the 2025 tax year. If you earned tips, overtime, paid car loan interest, or are 65 or older in 2025, you can claim the relevant deductions on your 2025 federal return (filed in early 2026).
Can I claim multiple OBBBA deductions at the same time?
Yes. All four deductions are independent, and you can claim every one you qualify for on the same Schedule 1-A. For example, a 66-year-old nurse who works overtime, recently bought a new American car, and occasionally receives tips could potentially claim all four deductions in the same tax year.
How do I file for OBBBA deductions?
All four deductions are reported on the new Schedule 1-A, which attaches to your Form 1040. They are above-the-line deductions, so you do not need to itemize — you claim them even if you take the standard deduction. Our Schedule 1-A calculator and filing guide walk you through every line.
When do these deductions expire?
All four OBBBA deductions are set to expire after the 2028 tax year. They are temporary provisions — Congress would need to pass new legislation to extend them beyond 2028. Use this four-year window to maximize your savings.