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The U.S. government has passed a tax change, which is known as the One Big Beautiful Bill. As the name suggests, the new legislation has introduced major changes to how federal taxes are calculated for individuals.
Whether you’re a taxpayer or an employer, understanding the One Big Beautiful Bill is critical because it directly affects your earnings, deductions, and overall payroll.
What is the One Big Beautiful Bill (OBBB)?
The One Big Beautiful Bill Act (OBBB) is an extensive legislative package signed into law by President Donald Trump on July 4, 2025. It is considered the most comprehensive tax and spending reform since the 2018 Tax Cuts and Jobs Act. The bill merges tax, spending, and regulatory updates into one consolidated law.
What’s Changed Under the New Law?
Key updates under the One Big Beautiful Bill:
Higher Standard Deduction = Lower Taxable Income
- Single filer: Increased from $15,000 to $15,750
- Married filing jointly: Increased from $30,000 to $31,500
- Additional deduction: Extra $750 for eligible filers
Child Tax Credit Increased to $2,000
Families with qualifying children will benefit from a higher child tax credit, which is raised from $2,000 to $2,200 per child.
This will not directly appear on your paystub, as it plays a vital role in your year-end tax filing. With the free paycheck creator, you can simply generate professional stubs to support your tax return.
No Federal Tax on Tips & Overtime
One of the most effective updates in the bill affects hourly as well as service-based employees.
If you are earning less than $150,000 annually, the following income is partially-tax exempted:
- Tip earning: No federal tips of up to $25,000
- Overtime pay: No federal tax on overtime up to $12,500
This change has allowed many employees to view a noticeable increase in pay, especially for those working in industries that rely on overtime.
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Adapt to the OBBB Tax Changes
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Who Benefits & Who Pays More?
| Category | Impact |
|---|---|
| High-income individuals & wealthy estates | The cuts from the Tax Cuts and Jobs Act are made permanent for individuals and businesses. |
| Tip sharing & overtime employees | With up to $25,000 annually or a business’s net income limit for self-employed individuals, which is turned off at a higher earnings. |
| Car buyers | Up to $10,000/- year for interest on US-assembled vehicles loans purchased after 2024. |
| Seniors who are aged 65+ | A temporary extra standard deduction of $6,000 or $12,000, phasing out at certain earning levels. |
Who pays more?
- Middle-earning Americans: Up to an 18% reduction in strip coverage for 7-11 million people.
- General public: The bill is expected to add $2.4-4.5 trillion to the federal deficit over the coming decade.
- Environmental stakeholders: The bill reverses numerous clean energy tax credits, which include EVs and solar.
Compliance tips for OBBB changes
- Stay on top of new deduction rules: Monitor eligible items such as overtime and auto loan interest.
- Adjust withholdings: To avoid any surprise from the new tax bracket.
- Claim enhanced child tax credits: Consider trump accounts for kids’ savings.
- Maximize the higher SALT deduction cap: It lasts longer in higher tax states.
You can continue generating professional pay stubs by checking the website and using the free paycheck creator based on current regulations.
FAQs on the One Big Beautiful Bill
1- How does OBBB affect individual taxpayers?
In 2017, it permanently extended the tax cuts, increased the child tax credit, and introduced temporary deductions for overtime and auto loan interest.
2- What are the new rules for SALT deductions?
The state and local tax (SALT) deduction cap is raised to $40,000 for income under $500,000, but this cap will be reduced after five years.
3- Are there new deductions for workers?
Yes, from 2025 to 2028, workers can deduct tips, overtime pay, and auto loan interest, provided they keep proper records.
4- Can I use the free paycheck creator to reflect the new One Big Beautiful Bill (OBBB) tax changes?
Yes, you can, but ensure that the tool is updated to the latest federal tax brackets, withholding rates, and deductions introduced by the OBBB.
5- Can freelancers use a free paycheck creator under One Big Beautiful Bill (OBBB)?
100% they can generate paystubs to monitor earnings, deductions and estimate taxes under the new rules.
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Key Takeaways
The One Big Beautiful Bill (OBBB) has fundamentally altered the way individuals, families, and businesses deal with their taxes. The tax changes range from increased child credits and temporary deductions to the extended business incentives and more stringent compliance requirements, and it is very important to be up to the mark with your planning and knowledge.
A free paycheck calculator, alongside other digital tools, can make it easier for employees, self-employed individuals, and companies to monitor their income, deductions, and tax withholding in line with the latest regulations.
