Most of the new deductions do not live on your Form 1040 at all. They live on a new attachment called Schedule 1-A, Additional Deductions, and they reach your return as a single combined number. If you have read about tips or overtime and wondered where exactly you write it down, this is the form.

It has six parts. Four of them are deductions, one computes the income figure that limits them, and the last one adds everything up. Reading it in order makes the design obvious.

Part I — Modified adjusted gross income

Everything starts here. The IRS puts it plainly: the deductions on Schedule 1-A "depend on an individual's income, and they phase out at higher income levels." Part I computes that income figure once, and Parts II through V all refer back to it.

This is worth pausing on, because it is the structural fact that most explanations skip. You do not get four independent income tests. You get one number applied four times against four different thresholds. The consequences are covered in our guide to MAGI.

Part II — No tax on tips

The deduction for qualified tip income, up to $25,000. The ceiling is the same for single and joint filers — it does not double for a couple. The reduction happens on Line 11, which uses a distinctive method: the amount by which MAGI exceeds the threshold is divided by $1,000 and "decrease the result to the next lower whole number," then multiplied by $100.

Reduction starts above $150,000 of MAGI for a single filer and $300,000 for joint filers. Itemizing is not required, and a valid Social Security number is.

Part III — No tax on overtime

The deduction for qualified overtime compensation, capped at $12,500 for a single filer and $25,000 for joint filers. Note that this one does double for a couple, while the tips ceiling does not.

The phase-out on Line 19 works exactly like Part II — the same $1,000 rounding, the same $100 per unit, the same $150,000 and $300,000 thresholds. The hard part of this deduction is not the phase-out but what counts as qualified: only the premium portion of overtime pay, not the whole overtime paycheck. That distinction is the subject of a guide of its own.

Part IV — No tax on car loan interest

A deduction of up to $10,000 for interest on a qualifying loan taken out to buy a vehicle. The IRS notes that "the loan and the vehicle must meet certain requirements," and those requirements are the whole game — this is not a deduction for any car loan.

We do not currently publish a calculator for this part, and we would rather say so than approximate it. If you are carrying vehicle loan interest, read the IRS material on the requirements directly before assuming you qualify.

Part V — Enhanced deduction for seniors

$6,000 per qualifying person aged 65 or older. This part uses a different phase-out mechanism from Parts II and III: a straight 6% of the excess over $75,000 (single) or $150,000 (joint), with no rounding.

The sequence matters. Lines 34 and 35 apply the reduction to one person's $6,000 and only then multiply by the number of qualifying spouses. That is why the deduction disappears at $175,000 for a single filer and $250,000 for a couple, regardless of whether one spouse qualifies or both.

Part VI — Total additional deductions

The parts are added together here, and the IRS instruction is to "add total additional deductions and enter the amount on Part VI and on the Form 1040, line 13b." One number crosses over to your return.

Example — how the parts combine on one return

  1. Line 1Part II — tips deduction$8,400
  2. Line 2Part III — overtime deduction$3,100
  3. Line 3Part IV — car loan interest$0
  4. Line 4Part V — senior deduction$0
  5. Line 5Part VI — total to Form 1040 line 13b$11,500

Because it arrives as one line, a mistake in any part is invisible on the 1040 itself. If the number looks wrong, the schedule is where you look.

What is not on this form

The SALT deduction is the notable absence. State and local taxes are an itemized deduction and belong on Schedule A, not here. That is not a filing detail — it is why SALT behaves so differently from the other four. Schedule 1-A deductions work whether you itemize or take the standard deduction; SALT only exists if you itemize.

The federal child savings account is also elsewhere. It is an account, not a deduction, and contributing to one does not reduce your taxable income on this schedule.

Practical notes

  • It has to be attached. Software will generate it from your answers, but a paper return without the schedule is a return without the deductions.
  • Married filing separately blocks Parts II, III and V. The tips, overtime and senior deductions all require joint filing if you are married.
  • A Social Security number is required on the return for those same parts.
  • These are temporary. The tips, overtime and senior deductions are effective for 2025 through 2028 under current law.
  • It is a deduction, not a credit. Part VI reduces taxable income. What it saves you depends on your marginal rate.

To see the parts filled in with your own figures, the Total Savings Estimator runs Parts II, III and V from one set of inputs and shows each phase-out step, so the arithmetic on the form is visible rather than assumed.