Data Notice: This article covers IRS Schedule 1-A for the 2025 tax year (filed during the 2026 filing season). Forms and instructions may be updated. Always verify with the latest IRS publications.

IRS Schedule 1-A Explained: How to Claim Tips, Overtime, Car Loan, and Senior Deductions

This article provides general tax education and is not a substitute for professional tax advice.

Schedule 1-A is a brand-new IRS form introduced for the 2026 filing season. It is the form taxpayers use to claim the four new deductions created by the One, Big, Beautiful Bill Act: the tips deduction, overtime deduction, car loan interest deduction, and enhanced senior deduction.

This guide walks you through each section of the form, explains what documentation you need, and highlights common mistakes to avoid.

What Is Schedule 1-A?

Schedule 1-A (Form 1040) is titled “Additional Deductions.” According to the IRS newsroom, it was first published for the 2025 tax year and allows taxpayers to claim one or more of the new above-the-line deductions.

Key Facts

Who files it: Anyone claiming tips, overtime, car loan interest, or senior deductions
When to use: Attached to Form 1040 or Form 1040-SR for tax year 2025 and later
Standard or itemized: These deductions are available regardless of whether you take the standard deduction or itemize
Where the total goes: Line 13b of Form 1040 or Form 1040-SR

Section-by-Section Walkthrough

Part I: Tips Deduction

This section covers the deduction for qualified tips received from customers. You will need:

W-2 Box 7 (Social Security tips) or Box 8 (allocated tips) — for employees
Schedule C net income — for self-employed tip earners
Your MAGI to determine phase-out applicability

The maximum deduction is $25,000. The phase-out begins at $150,000 MAGI ($300,000 for joint filers).

Common mistake: Including service charges or automatic gratuities. Only voluntary tips from customers qualify. Mandatory service charges are regular wages, not tips.

Part II: Overtime Deduction

This section covers the deduction for qualified overtime compensation. You will need:

Pay stubs or W-2 showing overtime hours and premium pay
Documentation that your overtime pay was required under the Fair Labor Standards Act

The maximum deduction is $12,500 ($25,000 for joint filers). Only the premium portion of overtime pay qualifies — not the regular-rate portion of overtime hours.

Common mistake: Deducting the full amount earned during overtime hours. Only the amount above your regular rate qualifies.

Part III: Car Loan Interest Deduction

This section covers interest paid on a qualified vehicle loan. You will need:

Lender statement showing total interest paid (received by January 31 if you paid $600+)
Vehicle Identification Number (VIN)
Proof the vehicle had final assembly in the United States

The maximum deduction is $10,000. The phase-out begins at $100,000 MAGI ($200,000 for joint filers).

Common mistake: Claiming interest on a used vehicle. Only vehicles where original use begins with the taxpayer qualify. Lease payments also do not qualify.

For more on vehicle-related tax strategies, see our Small Business Tax Guide.

Part IV: Senior Deduction

This section covers the enhanced deduction for taxpayers age 65 or older. You will need:

Proof of age (date of birth on file with IRS)
Your MAGI to determine phase-out applicability

The deduction is $6,000 per eligible individual ($12,000 for qualifying married couples). The phase-out begins at $75,000 MAGI ($150,000 for joint filers).

Common mistake: Confusing this with the existing additional standard deduction for seniors. The Schedule 1-A senior deduction is a separate, additional deduction.

Completing and Filing Schedule 1-A

After completing the applicable sections:

Add up all qualifying deduction amounts from Parts I through IV
Enter the total on line 13b of your Form 1040 or Form 1040-SR
Attach Schedule 1-A to your return when filing

Electronic Filing

All major tax preparation software — TurboTax, H&R Block, FreeTaxUSA, and others — has been updated to include Schedule 1-A. The software will prompt you with questions about tips, overtime, car loans, and age to determine eligibility automatically.

Paper Filing

If you file on paper, download Schedule 1-A and its instructions from IRS.gov/forms. Complete each applicable section and attach it behind your Form 1040.

Can You Claim Multiple Deductions?

Yes. If you qualify for more than one deduction, you claim all applicable ones on the same Schedule 1-A. For example, a 67-year-old restaurant server who purchased a new car could potentially claim:

Tips deduction (up to $25,000)
Senior deduction ($6,000)
Car loan interest deduction (up to $10,000)

That is up to $41,000 in above-the-line deductions on a single form.

Already Filed? How to Amend

If you filed your 2025 return before Schedule 1-A was widely available (or before your tax software supported it), you can file an amended return using Form 1040-X to claim the deductions retroactively.

The standard three-year window for amended returns applies. There is no penalty for amending to claim a deduction you were entitled to.

For a complete overview of other deductions you might be missing, see our Tax Deductions You Might Be Missing guide and How to File Taxes walkthrough.

Duration

All four deductions are available for tax years 2025 through 2028. Unless Congress extends them, Schedule 1-A will be phased out after the 2028 tax year.

Sources

IRS published schedule taxpayers will use to claim deductions — IRS — accessed March 26, 2026
Schedule 1-A, Additional Deductions: What to know — IRS — accessed March 26, 2026
One, Big, Beautiful Bill provisions – Individuals and workers — IRS — accessed March 26, 2026