Overview: The One Big Beautiful Bill

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The One Big Beautiful Bill is the informal name used to describe a large U.S. federal omnibus law passed in 2025. Officially titled the One Big Beautiful Bill Act, it combines multiple policy areas into a single piece of legislation, including tax policy, federal spending, and budget reforms.

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Purpose and Scope
The bill was designed as a comprehensive package addressing several areas of government at once rather than through separate laws. It builds on existing tax and budget frameworks and introduces new provisions affecting individuals, businesses, and federal programs.

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Key Areas Covered

• Tax Policy:
  The law extends and modifies elements of earlier tax legislation, including provisions affecting individuals, families, and businesses.

• Federal Spending and Budget Changes:
  It adjusts funding levels and rules for a range of federal programs, including entitlement and assistance programs, and makes changes intended to influence long-term budget outcomes.

• Defense and Border Security:
  The bill includes provisions related to national defense funding and border enforcement.

New Major Tax-Related Changes in the One Big Beautiful Bill

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• No federal income tax on tips: Tip income earned by workers in eligible service industries is excluded from federal taxable income, subject to reporting and eligibility rules.

• No federal income tax on overtime pay: Compensation earned for overtime hours is excluded from federal taxable income, as defined by federal labor standards.

• Personal car loan interest deduction: Allows taxpayers to deduct interest paid on qualifying personal vehicle loans, subject to limits based on loan amount, vehicle use, and income thresholds.

 

These provisions are intended to reduce taxable income for certain workers and households. Eligibility requirements, caps, and implementation details apply and may vary by taxpayer circumstance.