On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) took effect, marking one of the most comprehensive tax reforms in recent years in the United States.

This change affects both individuals with Social Security Numbers (SSN) and taxpayers with ITINs (Individual Taxpayer Identification Numbers), including employees, independent contractors, and small business owners.

Some measures are permanent while others are temporary, but all can directly impact what you pay or receive in your upcoming taxes.

1. Tax Brackets and Standard Deductions: What It Means for You:

A tax bracket is the percentage of taxes you pay based on your income level.

Previously, these brackets could change year to year, causing uncertainty. With the OBBBA, the rates are fixed and will only be adjusted annually for inflation, providing more stability for financial planning.

For example, if you are self-employed and earn more each year, you won’t automatically move into a higher tax bracket just due to inflation adjustments. This can represent significant long-term savings.

Additionally, the standard deduction (the amount you can deduct from your income before taxes are calculated) is increased and will continue to rise with inflation. 

In 2025, it will be:

• $31,500 for married couples filing jointly

• $23,625 for heads of household

• $15,750 for singles

This means more of your income will be tax-free, benefiting both employees and self-employed individuals.

2. Important Changes for Independent Workers and Business Owners:

If you work for yourself (with or without an LLC) or as a contractor, the qualified business income deduction increases from 20% to 23%. This reduces your taxable income and, therefore, the amount you owe the IRS.

Other business benefits include:

• Restoration of research and development (R&D) deductions

• 100% depreciation for certain equipment

• Higher limit for deductible expenses (Section 179) up to $2.5 million

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3. Benefits for Workers in Tipped and Overtime Jobs:

The OBBBA includes special deductions from 2025 to 2028:

• Tips: You can deduct up to $25,000 in declared tips without itemizing your deductions.

• Overtime: Deduction of up to $12,500 (singles) or $25,000 (married couples).

This benefits those working in restaurants, construction, retail, security, healthcare, and other jobs with tips or overtime. To take advantage, it’s important to formally report these earnings

 

4. Credits for Families with Children:

The Child Tax Credit increases to $2,200 per child under 17, with $1,700 refundable.

However, to claim it, both parents and children must have a valid SSN. ITIN holders no longer qualify, limiting the benefit for some immigrant families.

 

5. SALT Deduction and Homeowners:

The State and Local Tax (SALT) deduction increases from $10,000 to $40,000 between 2025 and 2029.

Starting in 2026, mortgage insurance premiums can be included as part of the interest deduction.

6. Payments via Apps like Zelle, Venmo, and CashApp:

If you use these platforms for your business or personal use, the OBBBA reinstates the reporting threshold for Form 1099-K at $20,000 and 200 transactions.

This means you won’t need to report small amounts as was required under the previous $600 limit (applicable for infrequent transactions from the same source that can be understood as direct payment for services rendered).

CHANGES FOR ITIN HOLDERS UNDER OBBBA!

• • Child Tax Credit (CTC): The OBBBA does not expand access to the Child Tax Credit for parents with ITINs. As under the TCJA and maintained by OBBBA, at least one parent must have a valid SSN, and the child must have an SSN to claim the full credit. Therefore, parents with ITINs cannot receive the full CTC, even if their children qualify.

  • Cuts to Social Benefits: Reductions in Medicaid and SNAP indirectly affect immigrant families, as many rely on these programs. In some states, citizen children with ITIN parents may lose coverage or face new requirements like work or income verification.

  • Elimination of Energy and Home Improvement Credits: ITIN parents who purchased electric vehicles or solar panels no longer qualify for federal credits, reducing savings opportunities.

  • Tip and Overtime Tax Exemption: ITIN parents working in sectors like restaurants or construction (with many tips and overtime hours) may pay less tax if they formally report these earnings.

  • Trump Accounts (Child Savings Accounts): Although the program does not discriminate by immigration status, access may be limited by banking or state requirements. Legally, a parent with an ITIN could open an account if the financial institution allows it.

Conclusion:

The OBBBA changes how workers, families, and businesses calculate and pay taxes. For immigrants and independent workers, these changes may mean more deductions but also the loss of some benefits.
Planning ahead and keeping good records of your income and expenses will be key to making the most of the new rules.