What the 'Big Beautiful Bill' Means for Your Taxes

Congress has passed one of the most significant pieces of tax legislation in years — a sweeping package that's been dubbed the "Big Beautiful Bill." Whether you're an individual filer or a small business owner in Pennsylvania, this law could meaningfully affect your tax bill. Here's a plain-language breakdown of the key provisions and what they mean for you.

What Is the Big Beautiful Bill?

The Big Beautiful Bill is a broad tax and spending package signed into law in 2025. It extends and expands several provisions from the 2017 Tax Cuts and Jobs Act (TCJA) that were set to expire, while also introducing new deductions and credits.

Extended and Enhanced Standard Deduction

The standard deduction — already nearly doubled under the TCJA — has been increased further. For 2025 and beyond, individual filers and married couples filing jointly will see higher baseline deductions, meaning more of your income is sheltered from tax before you even itemize.

No Tax on Tips

One of the most talked-about provisions: tips received by service workers are now excluded from federal taxable income. If you work in a tip-based industry, this is a direct reduction in your tax liability.

No Tax on Overtime Pay

Overtime wages earned by hourly workers are also excluded from federal income tax under the new law. If you regularly work overtime, this could result in meaningful savings when you file.

Enhanced Child Tax Credit

The Child Tax Credit has been increased and made more broadly available. Families with qualifying children will see a larger credit, which directly reduces the amount of tax owed — not just taxable income.

SALT Deduction Cap Raised

The $10,000 cap on the State and Local Tax (SALT) deduction has been raised. This is particularly relevant for Pennsylvania taxpayers who pay both state income tax and local property taxes and who itemize deductions.

20% Pass-Through Deduction Made Permanent

The Section 199A deduction, which allows owners of pass-through businesses (sole proprietors, S-corps, partnerships, LLCs) to deduct up to 20% of qualified business income, has been made permanent. Previously set to expire after 2025, this is now a lasting feature of the tax code.

Bonus Depreciation Restored to 100%

Businesses can once again immediately deduct 100% of the cost of qualifying equipment and property in the year it's placed in service. If you're planning to invest in equipment, vehicles, or technology for your business, the timing of those purchases now matters more than ever.

Expanded Section 179 Expensing

The Section 179 expensing limit has been increased, giving small business owners more flexibility in how they handle capital expenditures.

What This Means for Pennsylvania Filers

Pennsylvania has its own flat income tax rate and does not conform to all federal changes automatically. Some provisions — like the tip and overtime exclusions — apply only at the federal level, so you may still owe Pennsylvania state income tax on those amounts.

What You Should Do Now

Tax law changes create both opportunities and complexity. The best way to make sure you're taking full advantage of the new provisions is to work with a qualified tax professional. At Yates Accounting Services, we stay current on federal and Pennsylvania tax law so you don't have to.