Schedule 1-A Generator: the new 2025 deductions, line by line

Schedule 1-A (Form 1040), Additional Deductions, is a new form for tax year 2025 that gathers four deductions created by the 2025 law: no tax on tips, no tax on overtime, car loan interest, and an enhanced deduction for seniors. It has six parts: modified AGI in Part I, the four deductions in Parts II to V, and the total in Part VI, which carries to Form 1040, line 13b. You can claim them whether you take the standard deduction or itemize.

Four, all new for 2025: a deduction for qualified tips, a deduction for qualified overtime pay, a deduction for interest on a qualifying car loan, and an extra deduction for taxpayers who are 65 or older. Each has its own cap and its own MAGI phaseout threshold. They're kept together on this one schedule so the pieces don't get scattered across the return, and they don't overlap with itemized deductions on Schedule A.

No, and that's the biggest draw. All four are claimed on Schedule 1-A on top of either the standard deduction or your itemized deductions, so you don't have to itemize to get them. A worker who takes the standard deduction still claims the full tips or overtime deduction they qualify for. The decision to itemize on Schedule A is a completely separate calculation that doesn't affect these four.

For 2025 you can deduct up to $25,000 of qualified tips per return. The deduction starts to phase out once modified AGI passes $150,000, or $300,000 on a joint return, dropping by $100 for every $1,000 over the threshold, so a single filer's deduction is gone by $400,000. If you're married, you must file jointly to claim it, and the person who received the tips needs a Social Security number valid for employment.

Voluntary tips you receive in an occupation that customarily and regularly received tips, and that are reported, whether on a W-2, a 1099, or Form 4137. Cash and card tips both count. What doesn't count is a mandatory service charge or an automatic gratuity, like an 18 percent charge added to a large party, because those are treated as wages, not tips. And even when the income tax deduction applies, tips still owe Social Security and Medicare tax.

You can deduct the premium part of your qualified overtime, the extra pay above your regular rate required by the Fair Labor Standards Act, up to $12,500, or $25,000 on a joint return. If you're paid time-and-a-half, only the extra half counts. It phases out above $150,000 of modified AGI ($300,000 joint) at $100 per $1,000. If you're married you must file jointly, and the person who earned the overtime needs a Social Security number valid for employment.

You can deduct up to $10,000 of interest for 2025 on a loan taken out after December 31, 2024 to buy a new vehicle for personal use whose final assembly was in the United States, secured by a lien on the vehicle. You report the VIN on Schedule 1-A. Leases and used cars don't qualify. It phases out above $100,000 of modified AGI ($200,000 joint) at $200 per $1,000. Unlike the other three, the IRS doesn't require a joint return for this one.

For 2025, employers weren't required to report qualified overtime separately, so you can work it out from pay stubs or employer records. Take your FLSA overtime hours and multiply by half your regular rate. For example, 400 overtime hours at a $30 regular rate is $18,000 of overtime pay, but only the $6,000 premium (400 x $15) is deductible.

It's an extra $6,000 deduction for each taxpayer who is 65 or older, up to $12,000 on a joint return where both spouses qualify. It sits on top of the standard deduction and the existing additional standard deduction for age 65 ($2,000 single, $1,600 per married spouse for 2025), so it's a third layer. You must have been born before January 2, 1961, each qualifying person needs a valid Social Security number, married filers must file jointly, and it phases out at 6% of modified AGI over $75,000 ($150,000 joint).

Each deduction has its own modified AGI phaseout. Tips and overtime start phasing out at $150,000 single or $300,000 joint, at $100 of lost deduction per $1,000 of income over the line. Car loan interest starts at $100,000 single or $200,000 joint, but fades twice as fast at $200 per $1,000. The senior deduction starts at $75,000 single or $150,000 joint and drops by 6 percent of the excess. Higher earners get a reduced deduction, or none at all.

No. The total from Schedule 1-A lands on Form 1040, line 13b, which sits below the adjusted gross income line, so it lowers the taxable income your tax is figured on but leaves your AGI unchanged. That distinction matters, because a lot of other tax breaks, credits, and phaseouts key off AGI. They'll look at the AGI above these deductions, not the lower taxable income after them, so claiming Schedule 1-A won't help you qualify for AGI-based benefits.

Only the car loan interest deduction. The IRS says married taxpayers must file jointly to claim the tips, overtime, and senior deductions, so a separate return loses all three. The car loan interest deduction doesn't carry that joint-filing rule, and it phases out above $100,000 of modified AGI on a separate return.

The total from Part VI carries to Form 1040, line 13b. That line is below your adjusted gross income, so the deduction reduces your taxable income on top of the standard deduction or your itemized deductions. If you're a senior filing Form 1040-SR, the senior deduction still flows through Schedule 1-A the same way. Because line 13b comes after AGI, these deductions don't change your AGI or the tax breaks that depend on it.

No. The generator helps you fill out and produce a completed Schedule 1-A that you can review, attach to your Form 1040, and file, or use to estimate your deduction before entering it elsewhere. It doesn't transmit anything to the IRS, it doesn't confirm whether your tips, overtime, or vehicle actually qualify, and it isn't tax advice. You're responsible for the accuracy of your figures and for keeping the pay stubs, tip logs, and loan records behind them.

It saves the deduction times your top tax bracket, not the full amount. An $18,000 tips deduction for a single filer in the 12% bracket saves about $2,160, and a $6,000 overtime premium in the 22% bracket saves about $1,320. Social Security and Medicare tax still apply to the tips and overtime either way.