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No Tax on Tips, Overtime, Car Loan Interest and Senior Deduction Form: Additional Deductions
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Schedule 1-A (Form 1040) in short
Schedule 1-A is a new schedule for tax year 2025. It is used to claim four new deductions: qualified tips, qualified overtime compensation, qualified passenger vehicle loan interest, and the enhanced deduction for seniors. You can claim these deductions whether you take the standard deduction or itemize. The total goes on Form 1040 or 1040-SR, line 13b, or on Form 1040-NR, line 13c.
| Issued by | Internal Revenue Service (IRS) |
|---|---|
| Current version | 2025 (checked 2026-10-25) |
| Who fills it in | Individuals filing Form 1040, 1040-SR, or 1040-NR who can claim at least one of the four new deductions. That means people who received qualified tips, people who received qualified overtime compensation, people who paid or accrued qualified interest on a loan for a new vehicle bought for personal use, and people born before January 2, 1961. |
| Who receives it | The IRS, as part of your Form 1040, 1040-SR, or 1040-NR. |
| Where to send it | Attach it to your Form 1040, 1040-SR, or 1040-NR and file it with your return, by e-file or by mail to the address in the Form 1040 instructions. |
| Deadline | Filed with your 2025 income tax return. The Form 1040 instructions give April 15, 2026, as the due date for most people, not counting extensions. If you already filed, the IRS says you may amend your return to claim or change the tips deduction. |
| Official links | Official page · Official PDF · Official instructions |
What changed
This schedule is new for 2025. On February 27, 2026, the IRS updated the Schedule 1-A instructions to add more detail on the net income limit for tips from a trade or business, and a new heading on when a taxpayer who died in 2025 counts as age 65 for the senior deduction. The IRS later issued final regulations listing the occupations eligible for the tips deduction, adding categories such as visual artists, floral designers, and gas pump attendants.
How to fill out Schedule 1-A (Form 1040), line by line
| Part I, lines 1 to 3 | Modified adjusted gross income (MAGI) Line 1 is the amount from Form 1040, 1040-SR, or 1040-NR, line 11b. Lines 2a to 2d add back excluded Puerto Rico income and amounts from Form 2555 and Form 4563. Line 3 is your MAGI, which every phase-out on this schedule uses. |
| Part II, line 4a | Qualified tips on Form W-2, box 7 Qualified tips you received as an employee. If you had more than one employer, enter -0- here and use the worksheet for line 4c. The form says to see the instructions if Form W-2, box 5 is more than $176,100. |
| Part II, line 4b | Qualified tips on Form 4137 Qualified tips from Form 4137, line 1, row A, column (c). Form 4137 is for tips you did not report to your employer. Enter -0- if you do not file Form 4137. |
| Part II, line 4c | Employee qualified tips used With one employer, enter the larger of line 4a or line 4b. With more than one employer, use the Qualified Tips From More Than One Employer Worksheet in the instructions. |
| Part II, line 5 | Qualified tips from a trade or business Qualified tips included in Form 1099-NEC, box 1, Form 1099-MISC, box 3, or Form 1099-K, box 1a. Do not enter more than the net income of the business where you received them. |
| Part II, lines 6 to 13 | Qualified tips deduction The total is capped at $25,000. If MAGI is over $150,000 ($300,000 if married filing jointly), the cap is reduced by $100 for each full $1,000 over. Line 13 is the tips deduction. |
| Part III, lines 14a to 14c | Qualified overtime compensation Enter only the qualified overtime amount, not the full box total. Line 14a is the part included in Form W-2, box 1. Line 14b is the part included in Form 1099-NEC, box 1, or Form 1099-MISC, box 3. |
| Part III, lines 15 to 21 | Qualified overtime compensation deduction The total is capped at $12,500 ($25,000 if married filing jointly). If MAGI is over $150,000 ($300,000 if married filing jointly), the cap is reduced by $100 for each full $1,000 over. Line 21 is the overtime deduction. |
| Part IV, line 22 | Vehicle identification number (VIN) and loan interest Column (i) is the VIN of each vehicle. Column (ii) is any of the interest already deducted on Schedule C, E, or F. Column (iii) is the interest paid or accrued in 2025 minus column (ii). For more than two VINs, attach a statement. |
| Part IV, lines 23 to 30 | Qualified passenger vehicle loan interest deduction The total is capped at $10,000. If MAGI is over $100,000 ($200,000 if married filing jointly), the cap is reduced by $200 for each $1,000 or part of $1,000 over. Line 30 is the car loan interest deduction. |
| Part V, lines 31 to 35 | Senior deduction amount per person Starts at $6,000. If MAGI is over $75,000 ($150,000 if married filing jointly), it is reduced by 6% of the amount over. If the result is zero or less, enter -0-. |
| Part V, lines 36a to 37 | Enhanced deduction for seniors Line 36a is for you and line 36b is for your spouse on a joint return. Each person must have a valid social security number and have been born before January 2, 1961. Line 37 adds them. |
| Part VI, line 38 | Total additional deductions Add lines 13, 21, 30, and 37. Enter the total on Form 1040 or 1040-SR, line 13b, or on Form 1040-NR, line 13c. |
Common mistakes to avoid
- Filing as married filing separately and claiming the tips, overtime, or senior deduction. The instructions say a married person must file a joint return with their spouse to claim these.
- Entering the whole overtime pay amount. Qualified overtime is generally only the "half" portion of "time-and-a-half" required by the Fair Labor Standards Act. Extra pay above time-and-a-half and holiday or weekend premiums are generally not included.
- Counting automatic gratuities or service charges as tips. The instructions say these are not qualified tips unless the customer was clearly given the option to change or remove them.
- Including tips from an occupation that is not on the IRS list at IRS.gov/TippedOccupations, or tips received in actual cash that do not appear on any Form 1099.
- Claiming car loan interest on a used vehicle, a lease, or a vehicle that did not have final assembly in the United States. The loan must also have been originated after December 31, 2024.
- Leaving out the VIN on line 22. The instructions say the VIN of each vehicle must be on your return to take the car loan interest deduction.
- Deducting the same car loan interest twice, on Schedule C, E, or F and again on Schedule 1-A.
- Treating the $25,000 tips cap or the $25,000 joint overtime cap as a per spouse limit. The instructions say each applies to the combined amount on a joint return.
Questions about Schedule 1-A (Form 1040)
Do I have to itemize to use Schedule 1-A?
No. The instructions say you can claim these deductions whether you take the standard deduction or itemize on Schedule A.
My Form W-2 does not show overtime separately. How do I find the amount?
For 2025, forms were not changed to show qualified overtime separately. The instructions list methods, such as using a pay statement or dividing total overtime pay for the overtime hours by three when you are paid time-and-a-half. Keep a copy of any document you rely on.
Which jobs count for the tips deduction?
Tips must be received in an occupation that customarily and regularly received tips on or before December 31, 2024. The full list is at IRS.gov/TippedOccupations. Examples in the instructions include bartenders, wait staff, hairstylists, rideshare drivers, and home movers.
Which car loans qualify for the interest deduction?
The loan must be originated after December 31, 2024, used to buy a new vehicle for personal use, and secured by a first lien on that vehicle. The vehicle must be a car, minivan, van, SUV, pickup truck, or motorcycle under 14,000 pounds gross vehicle weight rating, with final assembly in the United States. Lease payments do not qualify.
Who can claim the enhanced deduction for seniors?
You (and your spouse on a joint return) must have been born before January 2, 1961, and have a valid social security number. The maximum is $6,000 per person, or $12,000 if both spouses qualify. It is reduced when MAGI is over $75,000 ($150,000 if married filing jointly).
Is Schedule 1-A the same as Schedule 1?
No. Schedule 1 reports additional income and adjustments to income. Schedule 1-A is only for the four new deductions, and its total goes on Form 1040, line 13b.
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Sources
Checked against the official sources on 2026-10-25. PDF Editor Hub is not affiliated with the Internal Revenue Service or any government agency. This page is general information, not legal or tax advice.
- https://www.irs.gov/pub/irs-pdf/f1040s1a.pdf
- https://www.irs.gov/forms-pubs/about-form-1040
- https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
- https://www.irs.gov/forms-pubs/changes-to-the-2025-instructions-for-form-1040
- https://www.irs.gov/forms-pubs/claiming-no-tax-on-tips-deduction-for-occupations-that-customarily-and-regularly-receive-tips-may-require-an-amended-return