OBBB Non-Health Care Tax Provisions

The One Big Beautiful Bill Act delivers new tax breaks, bigger deductions, and no-tax-on-tips rules.

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The One Big Beautiful Bill Act (OBBB) provided many new tax provisions. Some extended the 2017 Tax Cuts and Jobs Act (TCJA) laws that were soon to sunset. But new deductions and tax cuts are also now possible because of the OBBB.

From no taxes on tips to an increased standard deduction for seniors, the OBBB provided something for every age group. Here are some of the highlights.

Increased Senior Standard Deduction

For those taxpayers 65 and older, a $6,000 additional deduction is available for singles and $12,000 for married couples filing jointly. This deduction is in addition to the current additional standard deduction for seniors, according to the IRS. The current senior deduction is $1,950 for singles.

These additional senior deductions also layer over the standard deduction. For 2025, the IRS standard deduction is $15,000 for singles and $30,000 for married couples filing jointly.

Although it will be indexed to inflation, that means that the standard deduction plus senior deductions come to approximately $22,950 for a single filer who is 65 or older.

The new senior deduction can be used whether you take the standard deduction or you itemize.

The $6,000 senior deduction is in effect until Dec. 31, 2028, unless renewed by Congress. It also phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000) for joint filers.

Form 1099-K Reporting Threshold

Receiving Form 1099-K from a third-party settlement organization (TPSO) has been controversial for the past few years. A TPSO is a payment app like Venmo, Square, or PayPal. It could also be an online marketplace like eBay or Facebook Marketplace.

For tax years 2023 and prior, you would only receive a 1099-K if your payments through the app totaled more than $20,000 and you had at least 200 transactions.

But that was changed to $600. Protests from both taxpayers and TPSOs forced the IRS to implement a more gradual means to reach the $600. The agency lowered it per year.

• $5,000 in 2024
• $2,500 in 2025
• $600 in 2026 and after

The OBBB did away with this plan. The permanent threshold for receiving a 1099-K from a payment app or online marketplace is back to $20,000 and 200 transactions.

Despite not receiving a 1099-K, taxpayers are still responsible for declaring income on their tax returns.

1099-NEC and 1099-MISC Threshold Changes

If you are a freelancer or work in another capacity outside a W-2 job, you’ll receive a 1099 form. But the OBBB changed the threshold. Instead of the $600 or more income requirement, the threshold has been changed to $2,000. In other words, you won’t have a 1099-NEC or 1099-MISC issued to you if you’re below $2,000. (NEC is non-employee compensation, and MISC is miscellaneous information.)

However, you are still required to report the income to the IRS.

Non-Itemizers Charitable Deduction

In the first two years of the pandemic, under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, if you took the standard deduction, you were allowed to deduct an additional $300 (for a single filer) for any charitable cash gifts you made. That provision expired.

Now, the OBBB has reintroduced that deduction.

Beginning in 2026, non-itemizers can deduct cash donations to charity up to $1,000 for single filers and $2,000 for married filing jointly. The deduction applies only to direct cash gifts to qualifying 501(c) charities, not donor-advised funds or private foundations.

Limit on Itemizers’ Charitable Deductions for Top Tax Bracket

Effective tax year 2026, the OBBB caps the tax benefits of itemized charitable deductions at 35 percent. This also applies to those in the 37 percent tax bracket. In other words, high-income taxpayers donating $1,000 would receive a $350 deduction instead of the current $370.

Floor on Deductions for Itemizers and Corporations

As of tax year 2026, itemizers will be able to deduct charitable contributions only to the extent that their qualified contributions exceed 0.5 percent of their adjusted gross income (AGI). For example, a couple with an AGI of $300,000 may only deduct charitable donations in excess of $1,500.

Corporations will only be entitled to deduct charitable contributions to qualified charities that exceed 1 percent of their taxable income.

Tax Credit for Scholarship Granting Organizations

A new tax credit goes into effect on Jan. 1, 2027. It allows filers to claim up to $1,700 per taxpayer for donating to a scholarship-granting organization (SGO). The SGO must be for a private or religious school, K–12, and is required to be state-approved and a federally recognized nonprofit.

This is a credit, not a deduction. That means it’s a dollar-for-dollar reduction of your federal tax liability. It’s nonrefundable. The credit is permanent and is available to all individual taxpayers, regardless of whether they itemize. Corporations cannot take this credit.

‘No Tax on Tips’ Capped

According to BipartisanPolicy.org, “no tax on tips” for 2025 is actually structured as a federal income tax deduction. In other words, it reduces taxable income and, by extension, tax liability for the taxpayer claiming it.

But for 2026 to 2028, the deduction will be applied to tax withholding for some workers. This will enable them to experience lower taxes on each paycheck rather than one lump-sum benefit when they file their taxes.

The deduction is capped at $25,000 per tax year. It is available regardless of whether the taxpayer takes the standard deduction or itemizes.

The deduction is temporary and applies from Jan. 1, 2025, through Dec. 31, 2028.

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