OBBBA Miscellaneous Updates: What You Need to Know
Everyday Financial Updates
The OBBBA includes changes beyond taxes, student loans, and education, covering overtime pay, auto loan deductions, and consumer protections to help you keep more of your money and avoid surprises.
Beyond taxes, charitable contributions, education, and student loans, the OBBBA introduces a range of other provisions that could affect your finances. While these changes may not impact everyone, understanding them can help you plan more effectively.
Overtime Pay: New Tax Deduction
The OBBBA gives workers a federal tax deduction specifically for overtime pay starting in 2025. This only applies to the extra pay you earn for working beyond your regular hours, not your normal salary. For example, if your regular rate is $25 per hour and you earn $37.50 for overtime, only the $12.50 extra per hour is eligible for the deduction.
Here’s what you need to know:
How much you can deduct: Up to $12,500 per year if you’re single, or $25,000 if married filing jointly
Who qualifies: W-2 employees receiving overtime pay as required by labor laws
Income limits: The deduction phases out for individuals earning more than $150,000 or couples over $300,000
Timeline: Applies to pay earned from 2025 through 2028
Keep in mind: The deduction reduces your federal taxable income, but Social Security and Medicare taxes still apply to your overtime pay
In short, this is a way to keep more of the extra money you earn from overtime, while your regular salary is taxed as usual.
Auto Loan Interest Deduction: Supporting American-Made Vehicles
Starting in 2025, the OBBBA allows taxpayers to deduct up to $10,000 per year in interest paid on loans for new, personal-use vehicles that meet specific criteria.
Key Requirements:
New Vehicle: The vehicle must be new, not used
Personal Use: The vehicle must be used for personal purposes, not for business or commercial use
Secured Loan: The loan must be secured by a lien on the vehicle
Final Assembly in the U.S.: The vehicle must have undergone its final assembly in the United States. This includes many domestic models and some foreign models assembled in U.S. factories
Vehicle Type: Eligible vehicles include cars, SUVs, pickup trucks, vans, and motorcycles with a gross vehicle weight rating under 14,000 pounds
Income Limits:
The deduction begins to phase out for individuals with a modified adjusted gross income (MAGI) over $100,000 and for joint filers over $200,000
Tax Years:
This deduction applies to loans originated between January 1, 2025, and December 31, 2028
Claiming the Deduction:
The deduction is an above-the-line adjustment, meaning you can claim it even if you take the standard deduction
You'll need to report the Vehicle Identification Number (VIN) on your tax return
Your lender will provide a Form 1098 showing the interest paid, which you'll use to claim the deduction
Other Consumer Protections
The OBBBA introduces several rules to make everyday financial products safer and easier to understand. These changes may affect everything from service contracts to credit cards and household loans.
Key Updates:
Clearer Loan Disclosures: Lenders must provide straightforward information about interest rates, fees, and total repayment amounts for auto loans, personal loans, and other consumer credit. This makes it easier to compare options and avoid hidden costs.
Limits on Fees: Certain high-cost fees, including late payment fees or over-limit penalties, are now capped or must meet stricter disclosure standards. This protects borrowers from surprise charges.
Service Contract Oversight: Companies offering warranties or service agreements must clearly outline what is covered and what isn’t. Misleading or confusing terms are prohibited.
Fraud Prevention and Enforcement: The bill strengthens enforcement against predatory lenders and financial institutions that mislead consumers, giving regulators more authority to intervene.
Accessibility of Benefits: Some protections require lenders and service providers to offer easier ways to dispute charges or correct errors, making it simpler for consumers to resolve issues without legal action.
In short, these provisions aim to make everyday financial transactions safer and more transparent, so you can make decisions with confidence and avoid unexpected costs.
Planning Tips
Even if these updates seem small compared with taxes or student loans, they can have a real impact on your finances. Here’s what you can do:
Overtime Pay: Track your overtime hours and pay carefully. Only the extra pay beyond your regular rate qualifies for the deduction, so keep detailed records. Consider adjusting your withholding or estimated taxes to account for the deduction.
Auto Loans: If you’re planning to buy a new car, check whether it qualifies for the OBBBA interest deduction. Make sure it’s assembled in the U.S., used personally, and financed with a loan within the deduction limits. Ask your lender for Form 1098 showing interest paid.
Consumer Contracts: Review service agreements, credit card terms, and household loan contracts for fees and penalties. Take advantage of new protections to dispute errors or clarify confusing terms.
Budget Impacts: Even modest deductions or protections can free up cash for savings, debt repayment, or other goals. Factor them into your overall financial plan for the year.
These steps make the OBBBA changes tangible, so you can keep more of your money, avoid surprises, and make informed financial decisions.