The Big Beautiful Bill is now law, an 800+ page overhaul of U.S. tax policy packed with both exciting incentives and lesser-known changes that could significantly impact your bottom line.

Last week, we covered key updates for business owners:
100% bonus depreciation is back, Section 179 write-offs expanded, SALT deduction limits raised, and new tax breaks for retirees.

Now we turn our attention to what this bill means for individuals and families, especially those working hourly jobs, raising young children, or looking for smarter ways to save and invest.

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‍1. No Federal Income Tax on Tips or Overtime

(Sections 70201–70202)

Starting in 2025, many hourly workers will see a significant tax break: select tips and overtime pay will be excluded from federal income taxes. If you're wondering "did no tax on tips pass 2025?” the answer is yes, and it's one of the most talked-about wins in the service industry this year.

What You Need to Know:

• Up to $25,000 in tips is excluded from federal taxable income

• Up to $12,500 in overtime is tax-free for individuals

• Married filers can exclude up to $25,000 in overtime income

• Income cap: $150,000 (single) / $300,000 (married filing jointly)

• Applies to tax years 2025–2028

• Payroll taxes still apply (Social Security and Medicare)

• Not all tips and OT qualify, some reporting standards must be met

Why This Matters:

This is a big win for workers in the service industry and hourly professions, including restaurant staff, nurses, delivery drivers, tradespeople, warehouse employees, and many more. For those who frequently work overtime or earn a significant portion of income via tips, this could result in thousands of dollars in annual tax savings.

The Drawbacks:

• This is not a permanent change, only active through 2028 unless extended

• Income limits could phase out many higher-earning households

• State taxes and payroll taxes still apply, which reduces the total savings

• Requires proper documentation and employer-reported tips

Wealth Strategy Tip:

Redirect the tax savings from each paycheck into a Roth IRA, child savings account, or high-interest investment vehicle. A disciplined approach over four years could create a meaningful wealth cushion, especially when automated.

2. Deduct Up to $10,000 in Car Loan Interest

(Section 70203)

For the first time, individuals can deduct interest on a personal car loan significant shift in what’s considered a deductible personal expense. If you’ve ever wondered “is car loan interest tax deductible” or searched “can I write off car loan interest”, the answer under the new law is yes, for many taxpayers.

What You Need to Know:

• Deduction up to $10,000 per year for interest on a qualifying car loan

• Applies even with the standard deduction

• Car must be:

• Brand new

• Made in the U.S.

• Used for personal purposes only

• Vehicle Identification Number (VIN) must be listed on your tax return

• Income limits apply: $100,000 (single) / $200,000 (joint)

• Applies from 2025 through 2028

Why This Matters:

Americans finance trillions in vehicle loans every year, but interest was previously non-deductible unless used for business purposes. This deduction changes the math on personal car ownership, especially for families buying new vehicles.

The Drawbacks:

• No deduction for leases, used cars, foreign-made vehicles, or commercial use

• Strict documentation required VIN must match tax filing

• Only applies to taxpayers under income limits

Wealth Strategy Tip:

If you're planning to purchase a vehicle, this deduction could justify buying new instead of used, as long as it fits your financial goals. Consider combining this savings with a tax-advantaged vehicle choice, such as an electric car that may also qualify for separate federal credits.

3. Trump Savings Account: $1,000 for Every Child Under 8

(Section 70204)

Each child under age 8 will receive $1,000 from the government to open a new tax-advantaged account called the Trump Savings Account, a hybrid between a Roth IRA and 529 Plan. These provisions, while not directly related to new child support laws 2025 income tax, signal a continued effort to boost family-focused tax incentives.

What You Need to Know:

• $1,000 federal contribution per eligible child

• Parents can contribute up to $5,000/year, tax-deductible

• Funds grow tax-free

• Withdrawals at age 18 are tax-free if used for:

• Education

• First-time home purchase

• Healthcare expenses

• Retirement savings

Why This Matters:

This is a powerful new tool to start building wealth early in a child’s life, with multiple ways to use the funds for long-term benefit. Unlike traditional education accounts, it offers flexibility across life stages.

The Drawbacks:

• Limited to children under age 8 as of 2025

• Annual contribution cap of $5,000 per child

• Restricted withdrawal usage until age 18

• Subject to IRS rule changes in future administrations

Wealth Strategy Tip:

Use your child tax credit (see below) to fully fund this account annually. Just $5,000/year invested at a 7% return from ages 1–18 could result in over $180,000 in tax-free funds for your child’s future.

4. Child Tax Credit Increase

The Child Tax Credit has been raised from $2,000 to $2,500 per child, effective through 2028.

What You Need to Know:

• $500 annual increase per eligible child

• Applies through 2028

• Income phaseouts remain: $200,000 (single) / $400,000 (joint)

• Can be combined with Trump Savings Account contributions

Why This Matters:

While $500 might seem small, across multiple children over multiple years, this adds up. And unlike other credits, the child tax credit directly reduces your tax bill, not just your taxable income.

The Drawbacks:

• Not fully refundable for higher-income families

• Must coordinate with other child-related credits and deductions

• Doesn’t help those earning above phaseout thresholds

Wealth Strategy Tip:

Treat this increase as designated savings, not spending money. Allocate it automatically to your child’s Trump Savings Account or a family investment account for tax-optimized growth.

Final Thoughts: The Hidden Wealth Blueprint

This law isn't just a tax update, it's a blueprint for families and individuals to shift how they save, spend, and invest. With the right strategy, these changes could unlock five-figure savings over the next four years.

The tax code is evolving, and so should your plan.

And this is only Part 2. Coming up next, we’ll dive into additional provisions:

• Retirement account updates

• Credits for small business owners

• Changes to capital gains tax

• And who stands to benefit the most, and who might not

Let INVESTOR FRIENDLY CPA® Turn Tax Law Into Strategy

The Big Beautiful Bill is full of opportunity, but only if applied correctly. Tax strategies like bonus depreciation, expanded SALT deductions, and the new car loan interest write-off can lead to major savings. But missed steps, poor timing, or DIY shortcuts can cost you or trigger IRS attention.

At INVESTOR FRIENDLY CPA®, we offer proactive tax planning for:

• Real estate investors

• Business owners

• High-income earners

We help clients build custom strategies, run cost segregation studies, and file amended returns, all while staying fully IRS-compliant.

Schedule your personalized strategy session today or message us “TAX PLAN” on Instagram to get started.

Contact us:
Toll-Free: 1-800-522-6091
Website: www.investorfriendlycpa.com
Email: clients@investorfriendlycpa.com

Watch: Bonus Depreciation Is Back | Everything You Need to Know, a quick breakdown of key tax changes and how to use them strategically.