OBBBA Tax Impact Calculator

What Is the One Big Beautiful Bill Act (OBBBA)?

The One Big Beautiful Bill Act is sweeping 2025 tax legislation that extends and expands the 2017 Tax Cuts and Jobs Act while adding several new provisions. For most American households, it means lower federal income taxes in 2026 — sometimes significantly lower.

The 7 OBBBA Tax Changes Explained

• Tips Exemption: Up to $25,000 of tip income per year is excluded from federal income tax. This benefits restaurant workers, delivery drivers, hotel staff, and other tipped employees.
• Overtime Exemption: All overtime pay (hours over 40/week at 1.5× rate) is excluded from federal income tax. There is no dollar cap on the overtime exemption.
• Senior Deduction: Taxpayers age 65 and older receive an additional $4,000 standard deduction — on top of the existing senior deduction — reducing their taxable income further.
• Child Tax Credit: The CTC increases from $2,000 to $2,500 per qualifying child under age 17, putting $500 more per child directly back in parents' pockets.
• SALT Cap: The $10,000 limit on state and local tax deductions rises to $40,000 for married filers, providing major relief to homeowners in high-tax states like California, New York, and New Jersey.
• Auto Loan Interest: Interest paid on loans for new US-assembled vehicles is now deductible from federal income — up to $10,000 of interest annually.
• Standard Deduction: The elevated TCJA standard deductions are made permanent, preventing the 2026 reversion that would have effectively raised taxes for most households by cutting the standard deduction roughly in half.

Not all provisions apply to everyone. Use the calculator above to see exactly which ones benefit your situation — and by how much.