Republicans in the congress have approved the package of tax cuts and spending policy of President Donald Trump, known as the One Big Beautiful Bill Act (OBBBA), which is expected to sign on the fourth July in the law.
The bill expands the tax cuts that are originally determined by the Tax Cuts and Jobs Act (TCJA) of 2017 that will expire this year, and some of them are permanently extended, such as lower tax rates and a higher standard allowance for taxpayers.
OBBBA also includes new forms of tax reduction, including provisions to offer employees who earn tips and overtime, as well as pensioners, while also tackling tax problems for small companies and those who are confronted in making precious capital investments.
Given the breadth of the bill, companies, employees, families and pensioners will see changes in tax policy that influence them. Here is a look at five important policy areas that affect the bill.
What does the ‘Big, Beautiful Bill’ say for American employees?
House speaker Mike Johnson, R-La., And Huis Republicans celebrate the passage of the One Big Beautiful Bill Act 3 July 2025. (Kevin Dietsch / Getty images / getty images)
Federal Income Tax
The One Big Beautiful Bill Act (OBBBA) permanently makes the lower tax brackets with revised incomes strongs that have been determined by the TCJA.
OBBBA also makes the standard deduction, which was approximately doubled under the TCJA, permanently prior to the planned expiry date this year. The bill also increases the deduction by $ 750 for private individuals, $ 1500 for married couples and $ 1,125 for a household head, effective in the tax year 2025. About 90% of the federal taxpayers use the standard deduction instead of specifying.
Consume capital and factory investments
OBBBA restores the immediate 100% that protruding the capital investments that were temporarily allowed under the TCJA and uses it retroactively on investments on or after January 19, 2025, the day before President Trump’s inauguration.
The provision for capital investments is permanent under OBBBA, and the limit at the maximum that a taxpayer can cost is increased to $ 2.5 million under the account.
Republicans defy tax critics to push Trump’s characteristic ‘beautiful’ tax cuts by Trump’s
To encourage the construction of production factories and to make the construction of new factories in the US more economically feasible, the bill enables companies to fully cost new factories and factory improvements.
In fact, companies can immediately realize the tax benefits of the incentive, making such investments more attractive. According to the tax legislation before OBBBA, companies had to deduct the costs of non-residential property for a period of 39 years.
The law ensures full tax that permanently falls for capital investments and factories. (Emily Elconin / Bloomberg via Getty Images / Getty images)
Deduction of small companies
OBBBA makes the deduction of 20% permanent for small companies, including sole traders, partnerships and S -companies to deduct up to 20% of their qualified business income, plus 20% of the income from qualified real estate Investment Trust (Reit) and qualified Partnership (PTP).
It would also create a new inflation -corrected minimum deduction of $ 400 for taxpayers with at least $ 1,000 in qualified business income to ensure that owners of small companies have access to an improved basic base.
Most Americans taxes up if the house cannot pass ‘big, beautiful bill’
Retired tax reduction
OBBBA offers a bonus deduction of $ 6,000 for taxpayers aged 65 and older on top of the standard deduction that is available for all taxpayers and in addition to the existing extra standard deduction of $ 2,000 for a few files and $ 1,600 per qualifying spouse for joint fillers 65 and higher.
The bonus deduction of $ 6,000 is temporary and would be in force up to and including 2028. It phases for pensioners with a higher income, with the full deduction available for people with an income of up to $ 75,000 or $ 150,000 for joint files. It phases completely for people who earn more than $ 175,000 and couples who earn $ 250,000.
The provision was devised as an alternative to the proposal to eliminate taxes on benefits for social security, instead compensate part of what they owe on the basis of their income levels.
TIP -employees will be able to subtract some of their tips until 2028 under the bill. (Istock; Getty Images / Istock)
Tips and overtime
Although the bill stops the complete elimination of federal income tax on tipped income and overtime as discussed on the campaign track, the new diversions that such employees relieve until 2028 creates when they end.
Get Fox Business on the Go by clicking here
TIP -employees such as restaurant servers, hairdressers and drivers would be able to deduct up to $ 25,000 from qualified tips.
In addition, the bill creates an upper income deduction for overtime premium payments up to $ 12,500 for employees per hour that work overtime.
