New Above-the-Line Deductions You’ll See in 2025: What the One Big Beautiful Bill Means for You

If you’ve heard the buzz about the One Big Beautiful Bill Act (OBBBA), you might already know it’s one of the most wide-ranging tax packages in years. What makes it especially interesting is a handful of new above-the-line deductions—tax breaks you can claim even if you don’t itemize. For individuals and families in Green Bay and De Pere, these changes could mean real money back in your pocket starting with the 2025 tax year. Here’s what you need to know, and how to plan ahead during your next round of tax preparation.

Deduction for Qualified Tip Income

One of the headline changes is the new deduction for tip income. Starting in 2025 and running through 2028, taxpayers can deduct up to $25,000 of qualified tips as an adjustment to income. This is a major win for servers, bartenders, and others in the hospitality industry who have long faced inconsistent tax treatment on tips. The deduction begins to phase out once your modified adjusted gross income (MAGI) exceeds $150,000 for single filers or $300,000 for those filing jointly.

Deduction for Overtime Pay

Hourly workers aren’t left out either. The OBBBA adds a new deduction for qualified overtime wages—up to $12,500 for individuals or $25,000 for married couples filing jointly. Like the tip deduction, this one applies from 2025 through 2028 and phases out at the same income thresholds. It’s an above-the-line deduction, which means even if you take the standard deduction, you can still benefit. For many middle-income families in De Pere, this could be a meaningful offset to rising living costs.

Senior Bonus Deduction

Retirees get a boost too. Starting in 2025, seniors age 65 and older can claim a new “bonus deduction” of $6,000 (or $12,000 if both spouses qualify). The deduction begins phasing out once income exceeds $75,000 for single filers or $150,000 for joint filers. This above-the-line benefit is meant to provide relief for older Americans living on fixed incomes, helping them retain more of their Social Security or retirement distributions. It’s especially relevant for long-time residents of Green Bay planning their tax strategy during retirement.

Above-the-Line Charitable Deduction for Non-Itemizers

Beginning in 2026, taxpayers who don’t itemize will once again be able to deduct charitable gifts—up to $1,000 for single filers and $2,000 for married couples filing jointly. This reinstates a version of the COVID-era charitable deduction and encourages small-scale giving. If you give regularly to local parishes, food pantries, or youth programs in De Pere, this provision will reward your generosity directly on your tax return.

New Vehicle Interest Deduction

Perhaps the most surprising addition is the new-vehicle loan interest deduction. For cars purchased between 2025 and 2028, you can deduct up to $10,000 per year of interest paid on loans for new, personally used vehicles assembled in the United States. The full deduction applies to taxpayers with MAGI up to $100,000 (single) or $200,000 (joint). Beyond that, the benefit phases out gradually. This incentive is designed to support American manufacturing and make it easier for families to upgrade to newer, safer vehicles.

How to Prepare Now

These deductions won’t apply until the 2025 tax year, but smart planning starts now. Adjusting payroll withholding, tracking tip and overtime records, and keeping clean documentation for vehicle loans and charitable contributions will make claiming these deductions smooth and stress-free. Working with a local tax preparation professional can help you identify how each change interacts with your broader strategy—especially if you operate a small business, have multiple income streams, or plan to retire soon.

At Millhouse Accounting, we help clients across Green Bay and De Pere navigate new legislation like this every season. The One Big Beautiful Bill Act rewards those who plan ahead, and that’s exactly what good tax preparation is all about—turning complex changes into real savings for you and your family.