The One Big Beautiful Bill Act aims to provide tax relief to middle-class taxpayers by introducing new deductions and credits to help working households, families, and small-business owners. The bill includes provisions such as an expanded child tax credit, new deductions for overtime, tips, and seniors, benefiting those earning under $400,000.

Middle-income households can expect to retain more of their earnings under the OBBBA, with enhanced provisions for child tax credits, overtime deductions, and senior-specific deductions. The bill also offers relief for homeowners in high-tax areas and raises the state and local tax deduction limit to $40,000 for taxpayers earning under $500,000.

For hourly or service-based workers, the OBBBA introduces a tips deduction for qualifying tips earners with a MAGI under $150,000, as well as a new overtime deduction for those with qualified overtime income and a MAGI under $150,000. The bill also includes provisions for expanded tax savings related to education and dependent care.

Business owners and self-employed taxpayers can benefit from extended provisions under the OBBBA, such as an increased Section 179 expensing limit, a permanent 20% qualified business income deduction, and reinstated 100% bonus depreciation for property placed in service after Jan. 19, 2025. Some clean-energy and vehicle deductions have already expired.

Most benefits of the OBBBA are retroactive, taking effect in 2025. Taxpayers may want to postpone charitable contributions to 2026 to take advantage of the new charitable deduction for non-itemizers. Working with a tax professional is advised to maximize benefits under the new tax law.

Overall, the One Big Beautiful Bill Act offers significant tax relief for middle-class households who leverage deductions effectively before they expire.

Read more at Yahoo Finance: 6 ‘Big Beautiful Bill’ Tax Changes That Will Benefit the Middle Class