How the One Big Beautiful Bill Reshapes Tax Benefits Across Different Types of Americans

If you’re building in fintech, tax season just got more interesting.

The One Big Beautiful Bill (OBBB) — recently passed legislation — will reshape how millions of Americans file taxes. It doesn’t just tweak the tax code; it meaningfully modifies the tax liability for a wide range of everyday taxpayers.

For many Americans, it may result in greater tax savings. That means more money flowing back to your users. And whenever tax savings grow, fintech products — from banking apps to investing platforms to lending tools — see a surge in activity.

Let’s explore how OBBB impacts different types of Americans starting in tax year 2025:

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1. Workers with Variable & Supplemental Income

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These include tipped workers, hourly employees with overtime, gig workers, and those with mixed incomes.

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Key Changes

• “No Tax on Tips”: Workers in tipping occupations can deduct an amount of tips (up to $25,000) from taxable income. Individuals must work in an occupation where tipping is customary to qualify.
• “No Tax on Overtime”: Workers who receive overtime compensation may deduct the pay that exceeds their regular rate of pay (up to $12,500 for most filers and $25,000 for joint filers) from taxable income. Workers must be W-2 employees and overtime must meet federal labor standards—usually “time-and-a-half” for hours that exceed 40 hours per week.
• Cap & Phaseouts: These deductions phase out for individuals with a Modified Adjusted Gross Income (MAGI) greater than $150,000 ($300,000 for joint filers).

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What This Looks Like In Practice

Serena is a barista earning $39,000 per year, including $9,500 in tips. She used to owe tax on all her tips but OBBB changes that. For simplicity, the examples in this article use a fixed marginal 12% tax rate whereas actual IRS math will use a progressive tax rate.

Her $9,500 in tips are now tax-free, saving her around ~$1,000 compared to last year.

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What It Means

• For hourly and shift-based workers, OBBB’s targeted deductions mean greater tax savings.
• These savings represent spikes in cash that flow through your product — whether deposits, payments, or investments.

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2. Families & Dependents

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These include married couples with children, single parents, households with caregivers, and those claiming dependents beyond children.

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Key Changes

• Expanded Child Tax Credit (CTC): The bill permanently increases the CTC from $2,000 to $2,200 per eligible child and preserves inflation adjustment annually.
• Other Dependent Credit Permanence: Dependents who don’t qualify for the Child Tax Credit (e.g. parents) remain eligible under a permanent $500 credit.
• Refundable Adoption Credit: The previous Adoption Credit allowed families to reduce taxable income (up to $17,820 in 2025) but a portion of the new credit is refundable which means money can could be returned to families as a refund (up to $5,000).
• 529 Plan Withdrawal Expansion: Tax-exempt distributions of up to $20,000 for K-12 expenses are permitted (up from $10,000). Individuals now have more options for what qualifies as an eligible expense which includes books, online learning materials and tutoring fees.

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What This Looks Like In Practice

Luis & Ana earn $90,000 jointly and have two children under 17. With $15,000 of that income being overtime, their incremental savings stack up like this:

• Child Tax Credit: $400 ($200 increase x 2)
• Overtime: ~$1,800

That’s approximately over $2,000 in OBBB savings compared to last year.

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What It Means

• For families with children, OBBB increases the amount of money in their wallet.
• More money per child means greater spending on household expenses, savings, or investments—prime moments for fintech products to step in.

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3. Retirees, Seniors & Fixed-Income Households

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These include those over age 65, retirees with pensions, Social Security, or fixed incomes.

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Key Changes

• Extra Deduction for Seniors: Taxpayers aged 65+ may take an additional $6,000 deduction (or $12,000 for a married couple where both spouses qualify) beyond the regular or itemized deduction. Deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).
• Permanent Standard Deduction & Tax Brackets: The bill locks in the larger standard deduction and the 2017-era bracket structure, helping retirees in stable brackets.

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What This Looks Like In Practice

Georgia is 69, single, and earns $45,000 annually. OBBB gives her an incremental deduction of $720 compared to last year.

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What It Means

• Retirees are sensitive to cash-flow shifts. In a fixed-income world, even small increases in cash flow can shift decisions — e.g. medical spending, home improvements, or transfers to heirs.
• Fintech products targeting retirement (IRA management, health cost tools) can highlight these benefits as value differentiators.

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4. Homeowners and Vehicle Owners

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Key Changes

• Repeal of Environmental Credits: For some homeowners and vehicle owners, the bill may actually increase their tax liability. The bill permanently repeals Clean Vehicle Credits and residential energy credits such as the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.
• “No Tax on Car Loan Interest”: Individuals may deduct interest paid on a loan to purchase a qualified vehicle, as long as the vehicle is used for personal use. Lease payments do not qualify. Maximum annual deduction is $10,000 and and phases out with MAGI greater than $100,000 ($200,000 for joint filers).
• SALT Deduction Cap Increase: The State and Local Tax (SALT) Deduction provides a deduction for income and property taxes paid at the state and local levels. The bill increase the cap to $40,000 with incomes under $500,000.

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What This Looks Like In Practice

Let’s look at Serena’s story again. She is a barista earning $39,000 per year, including $9,500 in tips, but also pays $3,400 in car loan interest.

We previously mentioned that her incremental tax savings is over $1,000. With the car loan interest deduction, her savings compared to last year now total approximately $1,400.

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What It Means

• Many households will need to re-evaluate whether itemizing or taking standard deduction is optimal under new SALT caps.
• The repeal of environmental credits could disincentivize individuals from making certain purchases e.g. electric vehicles.

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Final Thoughts

OBBB reshapes the tax landscape for millions. For fintech companies, it’s not only important to understand how tax policy changes will impact the financial lives of Americans, it’s a chance to anticipate user behavior and design products that meet users where they are next tax season.

This article is a reminder: to build for the future, watch how legislation changes the financial lives of everyday Americans.

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Sources:

• https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors?utm_source=chatgpt.com