Part I · Lines 1–3
Modified adjusted gross income
Start from Form 1040, line 11b (AGI). Add back excluded Puerto Rico income and the Form 2555 and Form 4563 exclusions. Line 3 is the MAGI every later part uses.
Form 1040 · tax years 2025–2028
Schedule 1-A, line by line
Schedule 1-A, Additional Deductions, is where the new tips, overtime, car loan interest, and senior deductions are actually claimed. It works the same way whether you itemize or take the standard deduction, and its total lands on Form 1040, line 13b.
The short answer
- Part I figures one MAGI number. Every deduction on the form phases out from it.
- Tips: up to $25,000 per return. Overtime: up to $12,500, or $25,000 joint. Both lose $100 per whole $1,000 of MAGI over $150,000 ($300,000 joint).
- Car loan interest: up to $10,000, minus $200 per $1,000 (rounded up) over $100,000 ($200,000 joint). The VIN goes on the form.
- Seniors: $6,000 per qualifying person, minus 6% of MAGI over $75,000 ($150,000 joint).
- Married filing separately cannot claim the tips, overtime, or senior deduction.
Part by part (2025 form)
Part II · Lines 4–13
No tax on tips
Employee tips go on line 4 (Form W-2 box 7 or Form 4137). Self-employed tips from Forms 1099-NEC, 1099-MISC, or 1099-K go on line 5, limited to net profit. Line 7 caps the total at $25,000. Lines 8–12 subtract $100 for each whole $1,000 of MAGI over $150,000 ($300,000 joint). Line 13 is the deduction.
Part III · Lines 14–21
No tax on overtime
Qualified overtime in Form W-2 box 1 goes on line 14a; the rare 1099 case on line 14b. Line 15 caps it at $12,500 ($25,000 joint). Lines 16–20 apply the same $100 per whole $1,000 reduction over $150,000 ($300,000 joint). Line 21 is the deduction.
Part IV · Lines 22–30
No tax on car loan interest
List each vehicle’s VIN on line 22 with the qualified interest. Line 24 caps the total at $10,000. Lines 25–29 subtract $200 for each $1,000 of MAGI over $100,000 ($200,000 joint), and here a partial $1,000 rounds up. Line 30 is the deduction.
Part V · Lines 31–37
Enhanced deduction for seniors
$6,000 for each person with a valid SSN who is 65 or older (for 2025, born before January 2, 1961), reduced by 6% of MAGI over $75,000 ($150,000 joint).
Part VI · Line 38
Total
Add lines 13, 21, 30, and 37. The total goes on Form 1040 or 1040-SR, line 13b (Form 1040-NR, line 13c).
A worked phaseout
A single filer has $10,000 of qualified overtime and Schedule 1-A, line 3 MAGI of $160,500. The excess over $150,000 is $10,500. Line 19 divides by $1,000 and drops the fraction: 10. Line 20 is 10 × $100 = $1,000. Line 21 is $10,000 − $1,000 = $9,000. The extra $500 of MAGI does not cost anything.
Someone at the full cap loses all of it at the top of the range: $12,500 of overtime is gone at $275,000 of MAGI ($150,000 + 125 × $1,000) for a single filer. $25,000 of tips is gone at $400,000 single or $550,000 joint. You can run your own numbers in the overtime calculator and the tips estimator.
What to have in hand
- Tips: Form W-2 box 7 (social security tips), Forms 4070 you gave your employer, Form 4137 if you reported unreported tips, and your occupation’s Treasury Tipped Occupation Code. From 2026, look for box 12 code TP and box 14b.
- Overtime: a pay statement that shows the FLSA overtime premium. For 2025 the W-2 usually did not break it out; from 2026 it is box 12 code TT. See W-2 codes for tips and overtime.
- Car loan: lender statement of interest paid (Form 1098-VLI where furnished) and the VIN, which you can decode here.
Questions
What is Schedule 1-A?
Schedule 1-A (Form 1040), Additional Deductions, is the IRS form used to figure and claim the four deductions added for tax years 2025 through 2028: qualified tips, qualified overtime compensation, qualified passenger vehicle loan interest, and the enhanced deduction for seniors. It is attached to Form 1040, 1040-SR, or 1040-NR.
Do I have to itemize to use Schedule 1-A?
No. The IRS says eligible taxpayers can claim the Schedule 1-A deductions whether they itemize or take the standard deduction. The total on line 38 goes to Form 1040, line 13b, not to Schedule A.
How is the tips and overtime phaseout rounded on Schedule 1-A?
Down. Lines 11 and 19 say to divide the MAGI excess by $1,000 and drop any fraction (1.5 becomes 1), then multiply by $100. So a partial $1,000 over $150,000 ($300,000 joint) does not reduce the tips or overtime deduction. The car loan line (line 28) rounds up instead, then multiplies by $200.
Can married people filing separately use Schedule 1-A?
Not for the tips, overtime, or senior deductions. The form says a married taxpayer must file jointly to claim each of those. The person who received the tips or overtime, and each senior claiming the deduction, needs a valid Social Security number.
Where does the MAGI number come from?
Part I starts with Form 1040, line 11b, and adds back excluded income from Puerto Rico and amounts excluded on Form 2555 and Form 4563. That line 3 figure drives all four phaseouts.
Will the 2026 Schedule 1-A look the same?
The line numbers on this page are from the 2025 Schedule 1-A. The 2026 form had not been released when this page was checked, so line numbers may change. What changes for sure in 2026 is the input: employers now report qualified overtime in Form W-2 box 12 code TT and cash tips in box 12 code TP.