The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, is the biggest change to the U.S. tax code in nearly a decade. If you work for tips, earn overtime pay, or are a senior citizen, this law could put thousands of dollars back in your pocket when you file your 2026 taxes.
At JRICKSS Financial Services, we help families and individuals in New Jersey understand exactly how new tax laws affect their bottom line. Here is a breakdown of the key changes you need to know about right now.
If you work in a restaurant, drive for Uber or Lyft, deliver food, cut hair, or earn income from tips in any capacity, this is huge. Under the One Big Beautiful Bill Act, tip income is now eligible for a federal tax deduction. This applies to the 2025 and 2026 tax years.
According to the IRS, this deduction covers cash tips, credit card tips, and tip-sharing arrangements. You still need to report your tips as income, but you can now deduct them when calculating your taxable income. For workers in the service industry, this could mean a significantly larger refund.
Another major change: overtime pay is now tax-deductible up to $12,500 per year. If you regularly work more than 40 hours per week, this deduction directly reduces your taxable income.
This provision is especially important for hourly workers in construction, healthcare, warehousing, and other industries where overtime is common. If you earned $15,000 in overtime last year, you can deduct $12,500 of that from your taxable income.
The OBBBA introduced a new $4,000 additional deduction for taxpayers age 65 and older. Combined with the existing senior standard deduction amounts, this brings the total additional deduction for seniors to approximately $6,000 or more, depending on filing status.
If you are a senior citizen or you care for aging parents, this change could meaningfully reduce the tax burden on retirement income, Social Security benefits, and pension distributions.
For residents of high-tax states like New Jersey, the State and Local Tax (SALT) deduction cap has been raised from $10,000 to $40,000. This is a major win for NJ homeowners who pay significant property taxes.
If you own property in Essex County, Bergen County, Passaic County, or anywhere in northern New Jersey, you know that property taxes alone can exceed $10,000. The new $40,000 SALT cap means you can now deduct much more of what you actually pay in state and local taxes.
The child tax credit has also been updated under the new law. Families may see increased credit amounts depending on their income level and number of qualifying children. This credit directly reduces the amount of tax you owe, dollar for dollar.
If you have children under 17 and your household income falls within the qualifying range, make sure to speak with a tax professional about how this credit applies to your specific situation.
The One Big Beautiful Bill Act is not just a headline. It is real money that you could be leaving on the table if you do not adjust your tax strategy for 2026. Whether you earn tips, work overtime, own property in New Jersey, or are over 65, these changes were designed to benefit working families.
The problem is that most people do not know about these changes yet. Many tax preparers are still catching up. That is where we come in.
At JRICKSS Financial Services in East Orange, NJ, we specialize in helping individuals and families maximize their tax refunds. Our team stays up to date on every tax law change so you do not have to.
If you want to know exactly how the One Big Beautiful Bill Act affects your 2026 tax return, book a free consultation today. Call us at (844) 200-8027 or visit our office at 34 Prospect St, Unit 10, East Orange, NJ 07017.
This article is for informational purposes only and does not constitute tax advice. All information is based on publicly available guidance from IRS.gov. Consult with a qualified tax professional for advice specific to your situation.
