What Schedule 1-A is
Schedule 1-A, Additional Deductions, is the form the IRS created so taxpayers can claim the four deductions from the One Big Beautiful Bill Act. It has six parts:
| Part | What it covers |
|---|---|
| I | Modified adjusted gross income — the figure every phase-out is measured against |
| II | No tax on tips |
| III | No tax on overtime |
| IV | No tax on car loan interest |
| V | Enhanced deduction for seniors (65+) |
| VI | Total, which carries to Form 1040, line 13b |
You complete Part I, then only the parts that apply to you. None of this requires itemizing — the deductions sit alongside the standard deduction.
Caps and phase-outs at a glance
| Deduction | Maximum | Phase-out starts (MAGI) |
|---|---|---|
| Tips | $25,000 | $150,000 · $300,000 joint |
| Overtime | $12,500 · $25,000 joint | $150,000 · $300,000 joint |
| Car loan interest | $10,000 | $100,000 · $200,000 joint |
| Senior (65+) | $6,000 each | $75,000 · $150,000 joint |
Tips, overtime and car loan interest shrink by a fixed dollar amount per $1,000 of income above the threshold — $100 per $1,000, or $200 for car loan interest. The senior deduction works differently: it drops by 6% of the excess for each qualifying person, reaching zero at $175,000 (single) or $250,000 (joint).
What you need before you file
- A Social Security number valid for employment, and joint filing if you're married. Married filing separately cannot claim these.
- Your qualified overtime figure. For 2025 the IRS did not require employers to break it out on a W-2, so many people compute it from pay stubs using the Schedule 1-A instructions.
- The VIN for a car loan claim, plus a loan that originated after December 31, 2024 and holds first-lien status. Business-use interest already claimed on Schedule C, E or F has to be separated out.
- Records. Keep the pay stubs, loan statements and tip records behind whatever you enter.
Timing
The deductions run for tax years 2025 through 2028. The 2025 version of Schedule 1-A is filed during 2026; tips and overtime earned in 2026 go on the return you file in 2027. Unless Congress extends them, they disappear after tax year 2028.
Frequently asked questions
What is Schedule 1-A?
The IRS form collecting the four OBBBA deductions — tips, overtime, car loan interest and the 65+ senior deduction — with the total carrying to Form 1040, line 13b.
Do I have to itemize?
No. These work alongside the standard deduction.
Can I claim more than one part?
Yes. A server aged 66 paying off a 2025 car loan could claim Parts II, IV and V on the same return.
Does this cut my Social Security and Medicare tax too?
No. These are income tax deductions only — FICA still comes out of tips and overtime in full.
Will my paycheck change right away?
Not automatically. Withholding tables may not reflect the deduction, so the benefit usually arrives as a bigger refund.
Which tax years are covered?
2025 through 2028.