The One Big Beautiful Bill Act (OBBBA) made more than 100 changes to tax law – some of them temporary, most of them permanent. Here are four changes you’ll see on your 2025 Form 1040:

#1: Senior Deduction

Between 2025 and 2028, taxpayers 65 or older can claim a $6,000 bonus deduction ($12,000 if both spouses qualify).. This deduction is available regardless of whether the taxpayer takes the standard deduction or itemizes. The deduction is reduced by 6% of income above the modified adjusted gross income (MAGI) thresholds of $75,000 (single filers) or $150,000 (joint filers) and is completely phased out at $175,000 and $250,000, respectively.

#2 and #3: Reduced Tax on Tips or Overtime

Workers who received qualified tips can deduct up to $25,000, phased out for taxpayers with MAGI over $150,000 ($300,000 for joint filers).

Workers who receive qualified overtime compensation may deduct up to $12,500 ($25,000 joint). Only the actual overtime premium (the “half” portion of “time and a half”) is deductible. This deduction phases out beginning at MAGI of $150,000 (single) or $300,000 (joint).

Both of these deductions are available for tax years 2025 through 2028 and can be claimed by taxpayers who itemize as well as those who take the standard deduction.

While the Form 1040 is being modified by the IRS to report tax and overtime income to allow the deduction, Form W-2 is not being modified for 2025. The IRS has encouraged employers to provide this information to employees in a separate written statement, through an online portal, or – in the case of overtime compensation – in Box 14 of the employee’s Form W-2.

#4: Car Loan Interest Deduction

Individuals may deduct up to $10,000 each year between 2025 and 2028 representing interest paid on a loan used to purchase a new, US-assembled vehicle for personal use. This deduction begins to phase out for single filers with MAGI of $100,000 and is completely phased out at $150,000. For joint filers, the deduction begins to phase out at $200,000 of MAGI and phases out completely at $250,000. The deduction is available to both itemizers and non-itemizers.

Lenders will be responsible for providing a statement to borrowers early in 2026 reporting the total interest paid in 2025. Taxpayers will include the vehicle’s identification number (VIN) as well as the deductible interest amount on the designated IRS form.