The One Big Beautiful Bill Act (Working Families Tax Cut Act)
In 2025, a major federal tax law known as the One Big Beautiful Bill Act was signed into law. You may also hear it referred to as the Working Families Tax Cut Act, a name that reflects its primary goal: reducing tax burdens for working individuals, families, and small business owners.
This legislation reshapes several parts of the U.S. tax code by extending existing tax relief, introducing new deductions, and expanding credits. Here’s a clear breakdown of what it means for taxpayers.
Key Tax Cuts Made Permanent
One of the most impactful aspects of the Working Families Tax Cut Act is that it prevents several scheduled tax increases. Many provisions originally introduced under prior tax reform were set to expire — this law keeps them in place.
These include:
Lower individual income tax rates
An increased standard deduction, allowing more taxpayers to reduce taxable income without itemizing
Continued stability in tax brackets and filing rules
By making these provisions permanent, the law offers long-term predictability for tax planning.
Expanded Child & Family Tax Benefits
Families with children may see meaningful relief under this law. The Child Tax Credit is increased beginning with the 2025 tax year, with future adjustments tied to inflation.
For qualifying households, this can result in:
Lower overall tax liability
Higher refunds, depending on income and eligibility
New Deductions for Working Americans
The law introduces temporary, above-the-line deductions that directly benefit wage earners:
Tip Income Deduction (2025–2028): Certain tipped workers may deduct eligible tip income from federal taxable income.
Overtime Pay Deduction (2025–2028): Some overtime wages may qualify for a tax deduction, subject to limits.
These deductions apply whether or not you itemize.
Additional Individual Tax Changes
Other notable updates include:
Increased SALT Deduction Cap: The limit on state and local tax deductions is temporarily raised for qualifying taxpayers.
Auto Loan Interest Deduction: Eligible taxpayers may deduct a portion of interest paid on qualifying vehicle loans.
Higher 1099 Reporting Thresholds: Changes reduce reporting burdens for certain independent contractors and payment platforms.
Each provision has specific rules and effective dates, making professional guidance especially important.
Benefits for Small Businesses & Self-Employed Taxpayers
Business owners also benefit under the Working Families Tax Cut Act:
Permanent Qualified Business Income (QBI) Deduction: The 20% deduction for many pass-through businesses is preserved.
Enhanced Bonus Depreciation: Certain business assets may qualify for accelerated deductions, improving cash flow and investment planning.
These changes are designed to support growth, reinvestment, and long-term stability.
What This Means for You
The Working Families Tax Cut Act impacts how individuals, families, and businesses plan for taxes moving forward. While many taxpayers may see lower tax bills, eligibility and outcomes depend on income, filing status, and specific circumstances.
At Correct Choice Tax Solutions, we help clients:
Understand how new tax laws apply to them
Maximize available credits and deductions
Plan proactively for upcoming tax years
If you have questions about how these changes may affect your 2025 tax return, our team is here to help you make the correct choice.