Reading about one deduction at a time gives you a clean answer that is often wrong. The new deductions share a single income figure, and that figure erodes each of them at a different rate, starting at a different threshold. A worker who qualifies for two of them can find that one survives at full value while the other has already vanished — at the exact same income. This guide explains how the pieces interact, so the combined number our estimator gives you makes sense.

One MAGI, four deductions

Schedule 1-A is the form that carries the new deductions. Its structure tells you most of what you need to know: Part I computes modified adjusted gross income, which the IRS describes as determining "eligibility and phaseout levels for all deductions" on the schedule. Part II handles tips, Part III overtime, Part IV car loan interest, and Part V the enhanced deduction for seniors. Part VI adds them up, and the IRS instructs taxpayers to "add total additional deductions and enter the amount on Part VI and on the Form 1040, line 13b."

That single MAGI in Part I is the reason these deductions cannot be thought about in isolation. Raise your income by $10,000 and you are not adjusting one deduction — you are moving the input to all of them at once. Our Total Savings Estimator works the same way: one set of inputs, every deduction recalculated together.

Two different phase-out machines

The deductions do not shrink the same way, and this is where intuition fails.

  • Tips and overtime — stepped. The reduction is $100 for each full $1,000 of MAGI above $150,000 ($300,000 for joint filers). Partial thousands are dropped, so the reduction moves in $100 steps rather than smoothly.
  • Seniors — a straight 6%. The reduction is 6% of every dollar above $75,000 ($150,000 joint), with no rounding. It bites much earlier and much harder than the tips and overtime phase-out.
  • SALT — 30% of the excess, with a floor. The state-and-local-tax cap is reduced by 30% of MAGI above the threshold, but never below $10,000. It is the only one of the four that cannot be reduced to nothing.

Different thresholds, different rates, different rounding. Two of them start at $150,000 for single filers, one at $75,000, one far higher. Nothing about them lines up.

When everything survives

Below every threshold, stacking is simply addition. A married couple in their late sixties, one still working shifts at a restaurant:

Joint filers, $160,000 MAGI, both spouses 65+

  1. Line 1Tips — under the $300,000 joint threshold$8,000
  2. Line 2Overtime premium — under the $300,000 threshold$4,000
  3. Line 3Senior — $6,000 − 6% of $10,000, × 2 people$10,800
  4. Line 4Combined additional deductions$22,800

Notice that the couple is above the senior threshold of $150,000 but well below the tips and overtime threshold of $300,000. Their tips and overtime deductions are untouched while the senior deduction has already lost $1,200. That asymmetry at a single income is the whole point of running the numbers together.

When phase-outs hit at once

Push income higher and the two mechanisms diverge sharply. A single filer, 66 years old, working a tipped job:

Single filer, $187,000 MAGI, $20,000 of qualified tips, age 66

  1. Line 1Tips before phase-out (capped at $25,000)$20,000
  2. Line 2Tips phase-out — 37 full thousands × $100−$3,700
  3. Line 3Tips deduction$16,300
  4. Line 4Senior — 6% of $112,000 exceeds $6,000$0
  5. Line 5Combined additional deductions$16,300

The senior deduction is entirely gone here, because 6% of the excess passed $6,000 back at $175,000 of MAGI. The tips deduction has lost less than a fifth of its value at the same income. If you had only read the senior guide you would conclude you get nothing; if you had only read the tips guide you would miss that a second deduction you expected no longer exists.

The rounding quirk worth knowing

Because the tips and overtime phase-out counts only full thousands, the reduction is flat across a $1,000 band of income. A single filer at $153,400 and one at $153,999 take exactly the same $300 reduction. Crossing into the next full thousand costs another $100 of deduction — not a large amount, but it explains why the estimator's output can stay still while you nudge the income field.

Single filer, $153,400 MAGI, $10,000 of qualified tips

  1. Line 1MAGI over the $150,000 threshold$3,400
  2. Line 2Full thousands of excess3
  3. Line 3Phase-out reduction (3 × $100)−$300
  4. Line 4Tips deduction$9,700

SALT sits on a different form — and asks something of you

Tips, overtime and the senior deduction are claimed on Schedule 1-A, and the IRS confirms eligible taxpayers can claim them "whether they itemize deductions or claim the standard deduction." SALT is not like that. It is an itemized deduction on Schedule A, which means claiming it requires giving up the standard deduction.

So SALT is not a free addition to the stack. It only helps if your total itemized deductions beat your standard deduction, and that comparison depends on your mortgage interest, charitable giving and other items the estimator does not ask about. This is why the estimator treats SALT as a separate question rather than folding it in automatically: the other three deductions are yours either way, but the SALT figure is conditional on a decision you make about your whole return.

Shared requirements, and shared disqualifiers

  • A valid Social Security number is required for the Schedule 1-A deductions.
  • Married filing separately disqualifies youfrom all of them — the IRS states you must "file jointly if married, to claim the deduction." One filing-status choice can eliminate three deductions at once.
  • They are temporary.The tips, overtime and senior deductions apply "for 2025 through 2028."
  • They do not change your paycheck. These are income-tax deductions claimed on the return, not payroll-tax exemptions. Social Security and Medicare tax still apply to your full wages.

Quick answers

  • Do the caps interact? No. The tips cap of $25,000 and the overtime cap of $12,500 ($25,000 joint) are independent — one does not consume the other. Only the shared MAGI links them.
  • Why is my overtime figure so much smaller than my overtime pay? Only the premium portion qualifies. The overtime guide works through the arithmetic.
  • What about the car loan interest deduction? It is Part IV of the same schedule and follows the same one-MAGI-many-phase-outs pattern, but our calculators do not cover it yet, so it is not in the combined total.
  • How accurate is the combined total? It applies the published thresholds and formulas to the numbers you type. It does not know your other income, credits, or state rules, and it is an estimate rather than a filed return.

Enter your figures once and see all of it at the Total Savings Estimator, or open a single deduction on its own page — the tips, overtime, senior and SALT calculators each show every line of their own arithmetic.