3 Common Misconceptions about the One Big Beautiful Bill Act (OBBBA)
There’s been a lot of talk about new tax changes under the OBBBA, and it’s easy to feel uncertain about what’s true and what’s just noise. The good news is—you don’t have to navigate it alone. We’re here to help you separate fact from fiction so you can make confident, informed decisions about your finances. Here’s a look at a few common myths and what these changes actually mean for you.
1. “It eliminated federal income tax on Social Security benefits.”
What many believe: The new bill eliminates federal taxes on Social Security benefits for most retirees.
What’s actually true: The OBBBA adds a bonus standard deduction for taxpayers age 65 and older — for example, a $6,000 deduction for single filers with a modified adjusted gross income (MAGI) of $75,000 or less. This could lower, or in some cases even eliminate, taxes on Social Security benefits. However, the law does not remove taxes on Social Security income entirely. (Sources: Kiplinger, Merrill Lynch)
Why it matters: It’s important not to assume your Social Security benefits will automatically be tax-free under this new law. The amount you owe will still depend on your total income, other income sources, and whether you qualify for the new deduction. Reviewing your situation with your financial advisor or tax professional can help you understand how these changes may affect your retirement income.
2. “Tips and overtime pay are now completely tax-free.”
What many believe: The new bill makes tip income and overtime pay completely tax-free.
What’s actually true: The OBBBA adds new above-the-line deductions for qualifying tip income and overtime pay—but it doesn’t exclude those earnings from taxes altogether. You’ll still need to report this income, and the deductions come with specific eligibility rules (for example, certain occupations for tips and income limits for overtime). (Source: CKH Group)
Why it matters: If you—or a family member—work in a job that includes tips or overtime, it’s important to know that this isn’t a full tax exemption. The benefit is limited and phases out at higher income levels. Checking your eligibility with a tax professional can help you understand what kind of savings you might see.
3. “The new senior deduction (65+) applies universally and indefinitely.”
What many believe: Everyone age 65 and older automatically gets a large, permanent tax break under the new OBBBA law.
What’s actually true: The new deduction for taxpayers age 65+ is not automatic, and it’s not permanent. It’s based on income limits (specifically your modified adjusted gross income) and is currently set to expire after the 2028 tax year unless Congress extends it. (Sources: Tobias Financial Advisors, Merrill Lynch)
Why it matters: If you’re 65 or older, it’s important to understand that this deduction may not apply every year—or to every retiree. Your eligibility depends on your total income, including things like investment gains, required minimum distributions (RMDs), or business income. Reviewing your situation with your financial advisor or tax professional can help you plan realistically and make the most of any available deductions.
Bottom line
The OBBBA brings valuable benefits — but also fine print.
Before making year-end tax or retirement decisions, connect with your CPA and financial advisor to make sure you’re planning with accurate numbers, not myths.
✨ At CURO, we help clients understand how new tax laws, like OBBBA, affect their income, retirement, and financial goals — today and in the years ahead.