What CPA Firms Need to Know Now About the ‘One Big Beautiful Bill Act’ (OBBBA)

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, is now one of the most talked-about tax developments this summer. It delivers sweeping permanent and temporary tax law changes with significant implications for taxpayers—and CPAs.

Introduction & SALT/Deduction

OBBBA permanently extends the 2017 Tax Cuts and Jobs Act individual tax rates while introducing new opportunities for itemized deductions and relief from a previous SALT (state and local tax) cap. Under OBBBA, taxpayers with adjusted gross income under $500,000 can deduct up to $40,000 in SALT, compared to the previous $10,000 cap (Wikipedia). This change is poised to benefit upper‑middle‑income filers in high‑tax states like New York and California (Investopedia). Make sure clients in these areas know they may now benefit from itemizing again if their total deductions outpace the standard deduction.

Additional Deductions & Tax Planning

OBBBA also introduces new deductions for tipped and overtime income, as well as auto loan interest and enhanced senior deductions— all potentially reducing taxable income through 2028 (Kiplinger, Wikipedia). For example, qualified overtime pay beyond 40 hours per week may be eligible for deductions up to $12,500 (single) or $25,000 (married filing jointly); similarly, tipped workers may claim deductions up to $25,000 (Wikipedia).

Another strategic opportunity: seniors 65+ may claim an additional $6,000 deduction, on top of standard and age-based deductions, boosting their total deductible amount substantially (Kiplinger).

CPA firms should counsel clients to review their withholding and income projections, especially if they anticipate significant overtime or tip income or fall into the senior cohort. With proper planning, these deductions could substantially lower tax liabilities.

Action Steps & Summary

To help your clients maximize these updates, here’s what your CPA firm should do now:

1. Review past filings—Identify clients who previously refrained from itemizing due to the $10,000 SALT cap. Re-evaluate if itemizing is now more favorable.

2. Educate clients—Explain how deductions for tips, overtime, elder status, and auto-loan interest could apply. These benefits are temporary and set to expire in 2028, so timely action counts.

3. Update withholding calculations—With changes to deductions and potential tax liability shifts, clients may need to adjust their Form W-4 or estimated tax payments.

4. Plan for high-tax states—Clients living or working in high-SALT jurisdictions could particularly benefit. Help them model potential savings.

5. Track legislation—Some provisions phase out based on income (e.g., SALT cap phases out over $500,000), so staying current with repeal or extension timelines is crucial.

In summary, the One Big Beautiful Bill Act (OBBBA) ushers in substantial tax changes—including expanded SALT deductions, new incentives for tip and overtime pay, and enhanced deductions for elder taxpayers—all requiring prompt tax planning. By proactively advising your clients and adjusting strategies, your CPA practice can help them take advantage of these provisions and ease their tax burdens.