On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill (OBBB) Act into law. The legislation includes a range of tax policy changes, some of which affect public safety personnel and their families. The following summary outlines the key provisions with implications for first responders.
| RESOURCE: A first responder鈥檚 guide to money management
7 need-to-know impacts
There are several key points in the OBBB for first responders to know, some directly related to their jobs and others that could impact their off-duty lives:
1. No tax hikes in 2026
The 2017 Tax Cuts and Jobs Act (TCJA) was set to expire in 2026, which would have meant higher income taxes for most Americans. The OBBB prevents that, locking in the current tax brackets and rates going forward.
2. Bigger deductions for overtime and tip income (2025鈥�2028)
For many first responders, overtime and off-duty work are essential. OBBB allows up to $25,000 of tip income to be deducted from taxable income and up to $12,500 (or $25,000 for married couples) of overtime income to be deducted from federal income taxes. The deduction applies to overtime pay required under Section 7 of the Fair Labor Standards Act (FLSA), which mandates time and a half pay for hours worked over 40 per week for non-exempt employees. Most public safety workers, such as firefighters and police officers, qualify as non-exempt under FLSA. The deduction is only available for reported amounts and applies only to federal income taxes, not Social Security or Medicare taxes.
3. Child Tax Credit increased
Starting in 2026, the Child Tax Credit increases from $2,000 to $2,200 per child, and it will adjust with inflation going forward.
4. New 鈥淭rump Accounts鈥� for children
These accounts allow you to contribute up to $5,000/year per child (after-tax), starting in 2026. Money grows tax-deferred and converts to IRA-like treatment at age 18. Plus, children born between 2025 and 2028 may receive a $1,000 government contribution.
5. SALT deduction cap temporarily raised
If you live in a high-tax state, this matters. The cap on state and local tax deductions (SALT) increases from $10,000 to $40,000 in 2025, but is set to end after 2028.
6. Charitable giving boosted
Even if you don鈥檛 itemize, you can now deduct up to $1,000 ($2,000 married) for charitable donations.
7. Auto loan interest deduction (2025鈥�2028)
If you鈥檙e planning to buy a new U.S.-made vehicle, you can deduct up to $10,000 in auto loan interest if your income is under $100,000.
Why this matters
For public safety families, the OBBB Act鈥檚 provisions may offer changes to how income, savings and certain purchases are taxed. These adjustments could affect financial decisions around overtime earnings, long-term planning and household expenses.
If you鈥檙e not sure how these changes impact your family, reach out to a financial advisor who specializes in helping first responders build strong financial futures with clarity and confidence.
