The One Big Beautiful Bill Tax Changes for 2025

The One Big Beautiful Bill

The One Big Beautiful Bill, signed into law in July 2025, brings a number of changes that could help lower-income families — but also introduces risks. One of the most significant changes for 2025 is the increase to the Child Tax Credit (CTC). Beginning in tax year 2025, the bill raises the credit to $2,200 per child, permanently makes a larger portion of it refundable, and indexes it for inflation. For working parents, this means more direct financial benefit when filing their tax return, making the CTC a more powerful boost to household income. These changes for 2025 are designed to offer broader support.

Child Tax Credit or CTC

At the same time, the One Big Beautiful Bill expands the Child & Dependent Care Tax Credit (CDCTC): for those with the lowest incomes (AGI under $15,000), the credit rate goes up to 50% of qualifying expenses, though it phases down as income rises. Importantly, families will also see several key changes taking effect for 2025 in this area. These changes for 2025 help parents who pay for childcare or care for dependents, making the credit more generous and accessible for many working families. In addition, the adoption credit becomes more helpful — up to $5,000 is now refundable, giving a big lift to low-income families pursuing adoption.

No Tax On Overtime

The “No Tax on Overtime” provision of the One Big Beautiful Bill lets workers deduct up to $12,500 of their qualified overtime compensation from their federal taxable income (or up to $25,000 for joint filers). Importantly, this deduction applies only to the premium portion of overtime — for example, the extra 50% “half-time” you get when working overtime under the Fair Labor Standards Act (FLSA) — not the base pay. In short, we expect the impact of 2025 changes to span a range of tax credits and deductions. For workers who have a lot of overtime pay this will put more money in your pockets!

No Tax On Tips

The “No Tax on Tips” provision of the One Big Beautiful Bill lets workers deduct their cash tips as a deduction against their taxable wages. In this way, new changes for 2025 specifically benefit workers who rely on tips for their income. If your primary income is tips this could be a huge benefit to you and put more money in your pockets.

Titan Tax

At Titan Tax we will ensure you get all of the deductions you deserve and are entitled to. Give us a call to set an appointment. Looking ahead, we’re ready to help you navigate any changes for 2025 that could affect your taxes.

Important Links

For more detailed information check out the IRS website. https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions This can help you understand changes for 2025 in more depth.

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