Schedule 1-A (Form 1040): The New “Additional Deductions” Sheet for 2025
Beginning with 2025 returns (filed in 2026), the IRS is adding Schedule 1-A, Additional Deductions. This single page is where taxpayers will compute and claim four temporary deductions created by the One Big Beautiful Bill (OBBB): tips, overtime, passenger-vehicle loan interest, and a new senior deduction. You’ll complete the math on Schedule 1-A and then carry the totals to page 1 of Form 1040.
What’s covered on Schedule 1-A:
No tax on qualified tips — Deduct up to $25,000 of qualified, reported tips if your occupation appears on the IRS “customarily and regularly tipped” list. Applies to employees and self- employed; available whether or not you itemize. Income-based phaseouts apply.
No tax on qualified overtime — Deduct the premium (“half”) portion of time-and-a-half overtime, up to $12,500 single / $25,000 MFJ. Phaseout begins at higher MAGI levels. Available to itemizers and standard-deduction filers.
Passenger-vehicle loan interest — Deduct personal car-loan interest paid on a qualified vehicle (not leases), capped at $10,000; phases out at $100,000 MAGI single / $200,000 MFJ.
Senior deduction — An additional deduction of $6,000 per person age 65+ (separate from the standard deduction’s usual age-based add-on). Subject to MAGI-based phaseout.
Important: Schedule 1-A is currently draft. The layout and line references can change before filing season. We’ll update clients as the IRS finalizes the form.
How to prepare now:
Document the inputs. Keep W-2/1099s, tip logs, or payroll records showing the overtime premium, and annual car-loan interest statements. The form expects precise amounts.
Watch MAGI. Each deduction phases out as income rises. If you’re near a threshold, we can model timing strategies (deferrals, retirement contributions) to preserve eligibility.
Withholding check-up. New deductions can change your 2025 refund/balance. Update your W-4 using the IRS 2025 worksheet that now includes lines for tips, overtime, and car-loan interest.
SLT takeaway:
Schedule 1-A consolidates four worker-focused deductions into one place. If you earn tips, work overtime, financed a personal vehicle, or are 65+, there’s real opportunity here—but the details (MAGI thresholds, what counts as “qualified”) matter. We’ll walk you through eligibility, track the final IRS form, and make sure the numbers land correctly on your 2025 return.