Accounting Portal

Tax Resources for Accountants and Small Businesses (U.S.)

One Big Beautiful Bill Act (OBBBA) – IRS Tax Changes for 2025

Updated ·

Based on official IRS publications and announcements (updated November 2025).

Overview

The One Big Beautiful Bill Act (OBBBA), enacted in 2025, introduced several tax provisions administered by the Internal Revenue Service (IRS). The Act focuses on reducing tax burdens for working Americans and seniors, simplifying reporting requirements, and extending selected business incentives.

According to the IRS newsroom release “One, Big, Beautiful Bill provisions”, these changes apply to tax returns filed for the 2025 tax year and affect both individuals and small businesses.

Main Tax Changes for Individuals

  • Overtime Pay Deduction: Taxpayers may deduct certain qualifying overtime wages earned between 2025 and 2028. This deduction aims to increase net income for hourly employees.
  • 1099-K Reporting Threshold: The OBBBA restores the previous reporting limit for third-party payment platforms. Starting in 2025, Form 1099-K will apply only to accounts with more than $20,000 in payments and over 200 transactions.
  • Auto Loan Interest Deduction: A new deduction allows certain interest paid on qualified passenger vehicle loans to be deducted. Vehicles must meet the IRS “final assembly in the United States” requirement to qualify.

Business and Self-Employment Provisions

  • Bonus Depreciation: Businesses may continue claiming 100 percent bonus depreciation for qualified property placed in service after January 19, 2025, to encourage investment in equipment and infrastructure.
  • Qualified Business Income (QBI) Deduction: The IRS confirms that the QBI deduction under Section 199A remains available under OBBBA for eligible pass-through entities.
  • Employer Reporting Updates: Employers should review updated IRS instructions for Forms W-2 and 941 to ensure correct treatment of overtime compensation and related deductions.

Implications for 2025 Tax Filing

Taxpayers filing 2025 returns should verify eligibility for these new deductions and confirm that all 1099 and W-2 forms comply with updated IRS thresholds. The IRS recommends reviewing the Form 1040 instructions for 2025 and related schedules before filing.

Official IRS References

Source: Internal Revenue Service (irs.gov) – official publications and newsroom updates, 2025.

Disclaimer
The information provided on Accounting Portal is for general informational and educational purposes only and does not constitute professional accounting, tax, financial, or legal advice. While we strive for accuracy and timeliness, no representation or warranty is made regarding completeness or reliability. Always consult a qualified professional before making any business, tax, or financial decisions. Neither Accounting Portal nor its authors are liable for any loss or damage resulting from the use of this information.

© 2025 Accounting Portal. All rights reserved.

Tags: