What Do You Need to Know About the One Big Beautiful Bill for 2026?

The One Big Beautiful Bill (OBBB) is now officially federal law. President Trump signed the OBBB into law on July 4, 2025, and many of its provisions have immediate implications for the 2025 tax year. With this in mind, what do taxpayers need to know about the OBBB for 2026? Virginia tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains:

7 Key Provisions of the OBBB for Taxpayers in Virginia

The OBBB makes several important tax-related changes for both individuals and businesses. Here, we’re covering some of the key provisions for individual taxpayers—including one provision that applies specifically to business owners.

From now on, all taxpayers will need to be careful to ensure compliance with the OBBB. While many of the OBBB’s provisions provide tax savings opportunities, some of its provisions will have the opposite effect on taxpayers’ liability. Noncompliance can trigger substantial penalties, and it can also increase taxpayers’ risk of facing an IRS audit.

With this in mind, some of the key changes for individual taxpayers under the OBBB include:

• Tip Income Deduction – While the OBBB does not completely eliminate tax on tips, it does allow taxpayers who earn less than $150,000 to deduct up to $25,000 of their tip income from 2025 through 2028.
• Overtime Deduction – The OBBB includes a similar deduction for overtime pay that maxes out at $12,500 for individuals and $25,000 for joint filers. This deduction is also available from 2025 through 2028.
• Auto Loan Interest Deduction – Taxpayers who finance a qualifying vehicle assembled in the United States can deduct up to $10,000 in loan interest for the 2025, 2026, 2027 and 2028 tax years.
• Green Energy Tax Credit Repeal – The OBBB repeals the green energy tax credit (which applies to electric vehicles) no later than July 3, 2026.
• Charitable Deduction Rules – Under the OBBB, individual taxpayers may only take itemized charitable deductions if they account for 0.5 percent or more of their taxable income. However, the OBBB also creates a $1,000 above-the-line deduction ($2,000 for joint filers) for non-itemized charitable contributions.
• Senior Deduction – The OBBB creates a “senior deduction” of up to $6,000 for qualifying taxpayers age 65 and older from 2025 through 2028. This phases out when a senior’s modified adjusted gross income (MAGI) exceeds $75,000.
• Pass-Through Deduction Phase-In – The OBBB increases the phase-in range for Section 199A pass-through deductions by $50,000 for business owners ($100,000 for those filing jointly).

Again, these are just examples. The OBBB contains several additional provisions of which taxpayers need to be aware.

If you have questions or concerns about tax compliance under the OBBB, it will be important to ensure that you make informed decisions about the figures you include in your federal tax return next year. If you don’t, mistakes could immediately trigger interest and penalties, and they could also increase your chances of hearing from the IRS.

Need to Know More? Request a Call with Virginia Tax Lawyer Kevin E. Thorn Today

Virginia tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, provides experienced legal representation for IRS audits and other federal tax matters. To request a call with Mr. Thorn, call us at 703-752-3752 or contact us confidentially online today.