Four separate deductions arrived with the 2025 tax law, and people tend to research them one at a time. That is a reasonable way to start and a poor way to finish, because all of them are gated by the same number: modified adjusted gross income. Change that one figure and every deduction on the schedule moves at once.

The complication is that MAGI is not the adjusted gross income printed on your Form 1040. Schedule 1-A computes its own figure in Part I, and the IRS is explicit that this is the number the rest of the schedule uses. It starts from AGI and adds specific items back, so for most filers it is equal to AGI, and for a minority it is higher.

Where the number comes from

The order of operations is worth holding in your head, because it explains why some tax moves help and others do nothing.

  1. You total your income and subtract the adjustments that reach adjusted gross income. That is the AGI line on your 1040.
  2. Schedule 1-A Part I starts from that AGI and adds back certain amounts — the add-backs relate to income excluded from US tax, such as the foreign earned income exclusion and exclusions available to residents of certain US territories.
  3. The result is the MAGI used by every part of the schedule. Tips, overtime and the senior deduction each compare it against their own threshold.
  4. The schedule's total then flows to your 1040 as a deduction against taxable income.

The practical consequence of step 4 is the one people miss: the deductions computed on Schedule 1-A do not reduce the MAGI used on Schedule 1-A. There is no circular calculation and no way to claim a tips deduction in order to become eligible for a larger one.

Same number, four different thresholds

One MAGI, four gates. The thresholds are not aligned with each other, which is why a raise can wipe out one deduction while leaving another completely untouched.

  • Tips — reduction begins above $150,000 (single) or $300,000 (joint).
  • Overtime — the same thresholds as tips, $150,000 and $300,000.
  • Senior deduction — reduction begins far earlier, at $75,000 (single) or $150,000 (joint).
  • SALT — the cap begins to shrink above $505,000 for 2026, and unlike the others it also requires you to itemize.

A single filer at $160,000 is $85,000 past the senior threshold and only $10,000 past the tips threshold. The senior deduction is long gone; the tips deduction has lost $1,000 of its $25,000 ceiling. Same income, very different outcomes.

Two phase-out mechanics, not one

Knowing your MAGI is only half of it. The deductions shrink by different arithmetic, and the difference matters when you are deciding whether an extra $2,000 of income is worth taking.

Single filer, $158,400 MAGI — tips deduction

  1. Line 1MAGI over the $150,000 threshold$8,400
  2. Line 2Full $1,000 units in the excess (rounded down)8
  3. Line 3Reduction (8 × $100)−$800
  4. Line 4Tips ceiling ($25,000 − $800)$24,200

Single filer, age 68, $95,000 MAGI — senior deduction

  1. Line 1MAGI over the $75,000 threshold$20,000
  2. Line 2Reduction (6% of excess)−$1,200
  3. Line 3Deduction per person ($6,000 − $1,200)$4,800

Tips and overtime move in $100 steps, and the excess is rounded down to whole thousands first. The senior deduction and the SALT cap use a straight percentage of the excess, so every dollar counts. If you are near a threshold, the mechanic tells you whether small changes matter.

What actually moves MAGI

Because MAGI is built from AGI, anything that reduces AGI generally reduces MAGI. That is the lever, and it is a narrow one.

  • Pre-tax retirement contributions reduce the income that reaches AGI in the first place, so they move the number.
  • Health savings account contributions are an adjustment to income and have the same effect.
  • Itemized deductions do not. They come after AGI. Mortgage interest, charitable gifts and state taxes reduce taxable income without touching MAGI — which means they cannot restore a phased-out tips or senior deduction.
  • The Schedule 1-A deductions themselves do not. As above, they are the output, not an input.

This is the single most useful thing to know if you are close to a threshold. The instinct is to look for more deductions; the arithmetic says to look for adjustments that land above the AGI line instead.

Quick answers

  • Is my MAGI just my AGI? For most filers, yes. It differs when you have income excluded from US tax that the schedule adds back — the foreign earned income exclusion is the common case.
  • Which MAGI is this? The one defined on Schedule 1-A Part I. Other parts of the tax code use different modified AGI definitions for other purposes, so a MAGI figure computed for a different provision is not automatically the right one here.
  • Do my spouse and I combine incomes? On a joint return there is one MAGI for the household, compared against the joint thresholds. Married filing separately disqualifies you from the tips, overtime and senior deductions entirely.
  • Does my state use the same number? Not necessarily. States define their own starting point and conform to federal changes on their own schedule.

The Total Savings Estimator takes one MAGI figure and applies all four thresholds at once, which is the fastest way to see which deductions your income actually reaches. For a single provision, the tips calculator and senior deduction calculator show the phase-out arithmetic step by step.