Schedule 1-A: the new IRS form for tips, overtime, car loan and senior deductions
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Schedule 1-A is the IRS form for the four new deductions from the 2025 tax law. You use it to claim no tax on tips, no tax on overtime, car loan interest and the extra deduction for seniors. You can claim these deductions whether you itemize or take the standard deduction. They apply for tax years 2025 to 2028. You file the 2026 version with your return in early 2027.
What is on Schedule 1-A
| Part | Covers | Limit | Phase-out starts (MAGI) |
|---|---|---|---|
| Part I | Modified adjusted gross income (MAGI) | — | — |
| Part II | Qualified tips | $25,000 | $150,000 ($300,000 joint) |
| Part III | Qualified overtime | $12,500 ($25,000 joint) | $150,000 ($300,000 joint) |
| Part IV | Car loan interest | $10,000 | $100,000 ($200,000 joint) |
| Part V | Senior deduction | $6,000 per person 65+ | $75,000 ($150,000 joint) |
The total from Schedule 1-A goes on your Form 1040. It lowers your taxable income, not your adjusted gross income.
Part I: MAGI
You start by working out your modified adjusted gross income. For most people, MAGI is the same as AGI. People with foreign income exclusions add those back. Each later part uses MAGI to set the phase-out.
Part II: tips
- Tips must be in an occupation that customarily got tips before 2025.
- Tips must be reported to your employer or on your return.
- If you are married, you must file jointly.
Calculator: no tax on tips. Guide: no tax on tips.
Part III: overtime
- Only the premium part of overtime counts, the “half” in time-and-a-half.
- The overtime must be required by the Fair Labor Standards Act.
- Married couples must file jointly.
Calculator: no tax on overtime. Guide: no tax on overtime.
Part IV: car loan interest
- The loan must start after December 31, 2024.
- The vehicle must be new, for personal use, and have final assembly in the US.
- You must enter the vehicle identification number (VIN).
Calculator: car loan interest deduction. Guide: car loan interest deduction.
Part V: senior deduction
- You must be 65 or older by the end of the year. For 2025, that means born before January 2, 1961.
- You and your spouse each get up to $6,000, so up to $12,000 for a couple.
- Each person needs a valid Social Security number.
Calculator: senior deduction. Guide: senior deduction.
How to get ready for the 2027 filing season
- Keep your last pay stub of 2026 and your W-2. Employers may show tips and overtime in Box 14 or on a separate statement.
- Keep your car loan statement showing interest paid in 2026 and the VIN.
- Check your MAGI against the phase-out amounts above.
- Use the calculators on this site to estimate each deduction.
- Most tax software fills out Schedule 1-A from your answers.
Remember that your state may not follow these deductions. See tips and overtime by state.
Common questions
Do I need Schedule 1-A if I take the standard deduction?
Yes. These deductions are separate from the standard deduction. You claim them on Schedule 1-A on top of the standard deduction or your itemized deductions.
When was Schedule 1-A released?
The IRS released Schedule 1-A on March 2, 2026, for 2025 returns. The same form is used for tax years 2025 to 2028.
Can I claim more than one deduction on Schedule 1-A?
Yes. You can claim all four if you qualify. Each part has its own limit and phase-out.
Does Schedule 1-A lower my AGI?
No. The deductions reduce taxable income, after AGI. So they do not change credits or limits that are based on AGI.
Updated: November 1, 2026. Based on IRS news release IR-2026-28 (March 2, 2026), the Schedule 1-A instructions and the One Big Beautiful Bill Act of 2025. Check IRS.gov for the 2026 version of the form before you file.