There was so much included in the One Big Beautiful Bill that it can be easy to overlook valuable new tax breaks because they aren’t relevant to most people. So, we continue our coverage of certain deductions and breaks that could result in pleasant tax return surprises—either for business or individual—if handled correctly.
No Tax on Tips & Overtime
Employers have few new obligations when it comes to the tax changes regarding tips and overtime pay, aside from maintaining accurate reporting. Tips and overtime are both still subject to regular payroll and income tax withholding. Employees and some self-employed individuals who receive tips and overtime pay are the ones responsible for claiming the new deduction on their personal Schedule 1-A (Form 1040).
That being said, for tips, a review and potential update to reporting procedures, point-of-sale systems, and manager training can help ensure all reportable tips hit payroll and W-2s correctly. For instance, service charges that cannot be disregarded or modified do not qualify. Cleaning up the “paperwork” not only helps employers from a reporting standpoint, but being the type of employer that makes what is deductible fair and clear for your workers can lead to stronger recruiting and retention.
And if you’re still very much “in” the business and receive tips yourself, let this serve as a reminder that you may also benefit immensely from the no-tax-on-tips rule. Be sure to point it out to your tax advisor.
The list of occupations is broad and includes home services, personal services, instruction, and delivery activities.
For overtime, the IRS issued a Fact Sheet in January 2026 to help clear up some questions, but there are still plenty of details leaving business owners—and certainly their workers—scratching their heads. Who is eligible (generally speaking its FLSA-covered, hourly, not-exempt, non-executive workers), what is still taxed (payroll taxes), and what is NOT taxed (premium only—or the amount that surpasses the regular rate) can get tricky.
No Tax on Car Loan Interest
Did you buy a new passenger vehicle recently or are you hoping to soon? The One Big Beautiful Bill includes a provision for no-tax on interest on a new car loan (with plenty of caveats included, of course). We anticipate this one will be among the new tax breaksthat will fall through the cracks for many folks.
The deduction includes up to $10,000 annually in interest on loans for new U.S.-assembled passenger vehicles purchased after December 31, 2024. Loans must be secured by a first lien on the vehicle (no leases), and you’ll need the VIN on your return. The deduction is only applicable for personal car loans, not for business fleets or vehicles. However, if you follow regular business-use reimbursement procedures (standard mileage or accountable plans), you can continue doing so.
Look for a declaration of total amount of interest received from your lender either in your online portal, a regular monthly statement, an annual statement, or another summary letter to help you calculate your deduction.
An Extra Senior Deduction
If you are 65 or older, pay attention to an important addition to the new tax breaks that applies only to you. This break in in the form of an extra $6,000 per eligible individual, effective 2025 through 2028. Yes, this can be added to the current additional standard deduction for seniors under existing law. And to be eligible, the individual must turn age 65 on or before the last day of the taxable year (which is exceptionally great news for those with New Year’s Eve birthdays).
The four provisions above are each handled on the newly revised Schedule 1-A (Form 1040). Each of these tax breaks comes with specific thresholds, phaseout limits, and other possible qualifications, so be sure to pay attention and seek clarification when needed.
Feel free to contact us with questions.
Shutterstock photo 2127844088 | March 10, 2026