How to Claim Your OBBB Deductions (Schedule 1-A)
The IRS added a brand-new worksheet — Schedule 1-A "Additional Deductions" — for the four below-the-line deductions created by the One Big Beautiful Bill Act (P.L. 119-21). This guide walks each of the four parts, the MAGI phase-out math, and how the total flows onto Form 1040 Line 13b as an additional deduction that stacks on your standard or itemized deduction.
Not to be confused with the regular Schedule 1 (Additional Income & Adjustments to Income) — that form handles unemployment, business income, and above-the-line deductions like student loan interest. See the line-by-line Schedule 1 walkthrough for that separate filing.
What is Schedule 1-A and who files it?
Schedule 1-A ('Additional Deductions') is the 2025 IRS schedule for deductions for qualified tips, qualified overtime compensation, qualified passenger-vehicle loan interest, and eligible seniors. A taxpayer can claim an eligible deduction whether using the standard deduction or itemizing. Schedule 1-A line 38 carries to Form 1040 or 1040-SR line 13b (Form 1040-NR line 13c) and reduces taxable income, not AGI.
- Tips deduction: up to $25,000 for taxpayers in customarily tipped occupations.
- Overtime premium: up to $12,500 single / $25,000 MFJ (0.5× portion of FLSA time-and-a-half only).
- Car Loan interest: up to $10,000 on loans originated after 12/31/2024 for US-assembled vehicles under 14,000 lbs.
- Senior deduction: $6,000 per taxpayer 65+ (up to $12,000 MFJ) — stacks on the existing age-65 additional standard deduction.
- Schedule 1-A MAGI is line 11b AGI plus only the excluded Puerto Rico income and Form 2555 or Form 4563 amounts listed on Part I lines 2a through 2d.
- Because they don't reduce AGI, these deductions do NOT lower AGI-based thresholds like IRMAA, the NIIT threshold, or other phase-outs — they only cut taxable income.
- All four provisions are scheduled to sunset after 12/31/2028 unless Congress extends.
The four deduction parts of Schedule 1-A
Part II
No Tax on Tips
Part III
No Tax on Overtime (premium)
Part IV
Car Loan Interest
Part V
Senior Deduction (65+)
Step-by-step: filing Schedule 1-A
- 1
Gather your source documents
Use the final 2025 information returns and your own records. The 2025 Forms W-2 and 1099 were not changed to require separate qualified-tip or qualified-overtime reporting, so use Notice 2025-69 and the final Schedule 1-A instructions when a separate amount was not furnished.
- 2
Compute MAGI
Enter Form 1040, 1040-SR, or 1040-NR line 11b on Schedule 1-A line 1. Add only the Puerto Rico, Form 2555, and Form 4563 amounts specified on lines 2a through 2d; line 3 drives every phase-out.
- 3
Fill Part II — Tips
Enter reported qualified tip income (up to $25,000 before limitations). Apply the MAGI phase-out beginning at $150,000 single / $300,000 MFJ.
- 4
Fill Part III — Overtime premium
Enter only qualified FLSA overtime compensation—the pay above the regular rate required by FLSA section 7—up to $12,500 nonjoint / $25,000 MFJ before limitations.
- 5
Fill Part IV — Car loan interest
Enter qualified passenger-vehicle loan interest after applying every loan, vehicle, original-use, personal-use, first-lien, U.S.-assembly, under-14,000-pound GVWR, related-party, VIN, and business-use rule (up to $10,000 before phaseout).
- 6
Fill Part V — Senior deduction
Apply the final instructions' age, SSN, filing-status, per-person, and MAGI rules. The preliminary amount is up to $6,000 per eligible person, or $12,000 for two eligible spouses filing jointly.
- 7
Carry total to Form 1040
Add Schedule 1-A lines 13, 21, 30, and 37 on line 38. Enter line 38 on 2025 Form 1040 or 1040-SR line 13b (Form 1040-NR line 13c). It reduces taxable income, not AGI, and is separate from Schedule 1, Part II adjustments.
MAGI phase-outs
Each deduction uses line 3 MAGI, but the reduction mechanics differ. Tips and overtime reduce the capped amount by $100 for each completed $1,000 of excess MAGI; vehicle-loan interest rounds any excess up to the next $1,000 and reduces the capped amount by $200 per step; the senior deduction uses 6% of excess MAGI.
No Tax on Tips — MAGI Phase-Out
| Filing status | Phase-out begins (MAGI) | Fully phased out | Maximum deduction |
|---|---|---|---|
| Single / HoH | $150,000 | $400,000 | $25,000 |
| Married Filing Jointly | $300,000 | $550,000 | $25,000 |
Reduced by $100 for each full $1,000 of MAGI above the start threshold. The end column is where the $25,000 maximum reaches $0; a smaller deduction reaches $0 sooner.
No Tax on Overtime (premium) — MAGI Phase-Out
| Filing status | Phase-out begins (MAGI) | Fully phased out | Maximum deduction |
|---|---|---|---|
| Single / HoH | $150,000 | $275,000 | $12,500 |
| Married Filing Jointly | $300,000 | $550,000 | $25,000 |
Only the premium half of overtime (the 0.5× portion of time-and-a-half) is deductible. W-2 employees only.
Car Loan Interest — MAGI Phase-Out
| Filing status | Phase-out begins (MAGI) | Fully phased out | Maximum deduction |
|---|---|---|---|
| Single / HoH | $100,000 | $150,000 | $10,000 |
| Married Filing Jointly | $200,000 | $250,000 | $10,000 |
New vehicles only, with final assembly in the United States (verify via NHTSA VIN lookup). Loan must originate after December 31, 2024. Reduced by $200 for each $1,000 (or part) of MAGI above the start threshold.
Senior Deduction (Age 65+) — MAGI Phase-Out
| Filing status | Phase-out begins (MAGI) | Fully phased out | Maximum deduction |
|---|---|---|---|
| Single / HoH | $75,000 | $175,000 | $6,000 |
| Married Filing Jointly | $150,000 | $250,000 | $12,000 (both spouses 65+) |
Stacks on top of the existing additional standard deduction for taxpayers 65+. Only one spouse needs to be 65+ for the $6,000 amount on a joint return.
Common Schedule 1-A mistakes
- Deducting the full time-and-a-half instead of just the 0.5× premium portion.
- Claiming vehicle-loan interest without verifying every requirement in the final instructions, including final assembly in the United States and the loan and vehicle-use rules.
- Salaried exempt employees claiming an overtime premium they never received.
- Reconstructing a generic “pre-deduction MAGI” instead of following Part I lines 1 through 3 and adding only the listed amounts.
Related tools
Sources & References
Primary references used for this content
Schedule 1-A (Form 1040), Additional Deductions
Final 2025 line structure, phase-out rounding, and Form 1040 flow.
View on irs.gov
Instructions for Form 1040 (2025), including Schedule 1-A instructions
Eligibility, documentation, worksheets, and line instructions.
View on irs.gov
Qualified Tips & Overtime Guidance (2025)
OBBBA tips & overtime deduction guidance
View on irs.gov
✓3 primary sources; links re-checked on a weekly rotation by the source watcher
Disclaimer: This calculator provides estimates for educational purposes only. Not tax, legal, or financial advice. Results may vary based on your specific circumstances. Consult a qualified CPA or tax professional for personalized guidance.