Schedule 1-A (Form 1040), Additional Deductions
Schedule 1-A (Form 1040) is a new schedule (2025) that taxpayers must use to take advantage of the no tax on tips, no tax on overtime, no tax on new car loans, or the new enhanced deduction for seniors that are part of the One Big Beautiful Bill Act (OBBBA). These deductions are currently only available for tax years 2025 through 2028.
Who Should Use Schedule A?
Anyone who qualifies for one or more of the new deductions under OBBBA can use Schedule 1-A, including:
- Taxpayers who receive tips
- Taxpayers who work overtime (non-exempt employees)
- People who bought a new car assembled in the U.S. and used a loan for the purchase (must be purchased during the tax year for which the form is filed)
- Senior taxpayers who are 65 and older
Schedule 1-A can be used whether you take the standard deduction or itemize.
How to Complete Schedule 1-A
Schedule 1-A has two pages and six (6) sections. At the top of the form, include your name and Social Security number (SSN) as it appears on your tax return. Complete Part 1 and any of the sections that are relevant to you.
Part I – Modified Adjusted Gross Income (MAGI) Amount
In this section, enter your MAGI from line 11b on your Form 1040 in line 1 of Part 1. If you have income from Puerto Rico, or are filing Form 2555 or 4563, complete lines 2a through 2e. Add lines 1 and 2e and put this total in line 3.
Part II – No Tax on Tips
Only complete this section if you receive qualified tips during the tax year. You can’t deduct more than $25,000 of qualified tips, regardless of your filing status.
You’ll need your W-2 and/or Form 4137 (if applicable) to complete lines 4a and 4b. For those with multiple employers, you’ll need to use the worksheet provided in the Form 1040 instructions to determine the amount to put in line 4c. If you earned tips during the course of trade or business, that amount should be entered on line 5. Follow the mathematical instructions for lines 6 through 13.
Part III – No Tax on Overtime
Only complete this section if you are a non-exempt employee who receives overtime compensation.
You will need your W-2, Form 1099-NEC, and/or Form 1099-MISC. If your employer gave you an FLSA Overtime Premium Statement, you may use that to determine your qualified overtime compensation, as well. Follow the instructions for lines 14a through 14c to determine your overtime compensation. Then, follow the calculation instructions on lines 15 through 21.
Part IV – No Tax on Car Loan Interest
Complete this section if you purchased a qualified passenger vehicle during the tax year, and that car was paid for with a loan. The maximum amount you can deduct is $10,000. If you deduct the full loan interest on Schedule C, E, or F, you cannot take the deduction on Schedule 1-A.
Add the vehicle identification number (VIN) on line 22. On line 22ii, you’ll add the paid or accrued interest on the loan that was deducted on other schedules. For any interest paid over the amount on 22ii, enter it on 22iii. Follow the calculation instructions for lines 23 through 30.
Part V – Enhanced Deduction for Seniors
Do not complete this section unless you are 65 or older. You must have a valid Social Security number (SSN) to claim the deduction. Follow the instructions for lines 31 through 37 to calculate your deduction amount. The maximum deduction is $6,000.
Part VI – Total Additional Deductions
On line 38, add together lines 13, 21, 30, and 37 to determine the total additional deductions you can claim on your return. Enter the amount on line 38 (Schedule 1-A) on line 13b Form 1040 or 1040-SR, line 13c for Form 1040-NR.
Need Help?
If you need help completing your Schedule 1-A or other tax forms, please contact Tax Defense Network at 855-476-6920 for a free consultation. We offer a variety of affordable tax services, including tax prep and audit assistance.
