Tax filing season is officially underway, and with it comes a new addition to the federal Form 1040.
Schedule 1-A (Form 1040) is used for new deductions stemming from the One Big Beautiful Bill Act (OBBBA). Read on to learn what exactly Schedule 1-A is and if you need it to file your tax return.
The Schedule 1-A (Form 1040) is a new form to help you figure out new tax breaks that began in 2025.
It goes along with the Form 1040, which is your federal income tax form. There’s also a 1040-SR for people aged 65 or older. Both the regular Form 1040 and 1040-SR use the same schedules and instructions.
Schedule 1 is an additional form you use to report income from sources such as unemployment payments, prize money, and gambling winnings, and to calculate deductions like student loan interest, self-employment tax, and others.
New this tax filing season is the Schedule 1-A. It’s another form to figure out deductions, but it’s only for the ones passed under the OBBBA:
-
No tax on qualified cash tip income
-
No tax on qualified overtime income
-
No tax on qualified vehicle loan interest
-
The increased deduction for seniors age 65 or older
Read more: 4 ways the One Big Beautiful Bill could lower your taxes
The OBBBA, signed into law on July 4, 2025, created the four new deductions mentioned above. You can claim them for tax year 2025, and they’re available to those who take the standard deduction and those who itemize. Here’s a deeper dive.
“No tax on tips” is for taxpayers who work in certain occupations and receive tips.
There’s a comprehensive list of hundreds of jobs on the IRS website. It includes most restaurant workers, many entertainers, hospitality workers, people in the wellness industry, and more.
Remember, only certain tips qualify: The IRS defines qualified tips as “voluntary cash or charged tips received from customers or through tip sharing.”
The maximum deduction is $25,000, and it phases out for taxpayers with a modified adjusted gross income (MAGI) over $150,000 if filing alone or $300,000 if filing jointly.
Another new deduction is for individuals who receive qualified overtime compensation. Taxpayers may deduct the pay that exceeds their regular pay rate. For example, if you get time-and-a-half for working overtime, you can deduct the half portion.
The maximum deduction is $12,500 for a single filer and $25,000 for joint filers, and it phases out for those with a MAGI over $150,000 if filing alone or $300,000 if filing jointly.
This deduction is only available for new car purchases for personal use (no leases) and only for certain types of cars.
The maximum deduction is $10,000, and it phases out for those with a MAGI over $100,000 ($200,000 for joint filers).
Here are the eligibility requirements:
-
The loan must have originated in 2025.
-
The vehicle is a car, minivan, van, SUV, pick-up truck, or motorcycle.
-
The gross vehicle weight rating is less than 14,000 pounds.
-
The car underwent final assembly in the United States. Use the VIN Decoder to find the plant where final assembly took place. Keep your VIN handy, as you’ll need it to complete the Schedule 1-A form.
The final new tax deduction included in the OBBBA is an extra deduction for seniors.
People age 65 or older can claim an additional $6,000 deduction or $12,000 for married filers. This is on top of the standard deduction or your itemized deductions.
The deduction phases out for taxpayers with a MAGI of more than $75,000 ($150,000 for joint filers).
So, who needs to use this new Schedule 1-A? Only taxpayers who plan to take any of the four new deductions need to file a Schedule 1-A.
This is in addition to a Schedule A if you itemize your taxes. You might also need to file a Schedule 1 if you have any additional income like unemployment payments, prize money, gambling winnings, or want to claim any deductions that appear on the schedule, like student loan interest or self-employment tax. None of these schedules replaces another; they are in addition to the others — so you may end up filling out all three.
If you don’t qualify for any of the four deductions on Schedule 1-A, you don’t need to fill it out.
Get your calculator ready and brush up on those math skills. You’ll need them to complete Schedule 1-A. It is a two-page form; you only need to fill out the parts that apply to you.
You’ll need some basic information before you fill out the Schedule 1-A, which has six sections. In addition to your name and social security number, you’ll need some numbers from your Form 1040, like your modified adjusted gross income (MAGI), for Part I.
If you qualify for the no tax on tips deduction (Part II), you’ll need several additional numbers, including the amount of tips you received. You’ll then have to add, subtract, multiply, and divide to come up with the amount of qualified tips you can deduct (see instructions below).
The “no tax on overtime” section (Part III) is similar. You’ll need your W-2 and any other forms that list qualified compensation. Then you’ll add, subtract, multiply, and divide to determine the amount you can deduct.
For the no tax on car loan interest section (Part IV), you’ll need your VIN or VINs and anything you might deduct related to that vehicle on another schedule, like for a business as a sole proprietor (Schedule C), supplemental income or loss (Schedule E), or use on a farm (Schedule F).
After doing some math, you’ll end up with the amount of your “qualified passenger vehicle loan interest deduction.”
The section on the enhanced deduction for seniors is a bit easier (Part V): You need your modified adjusted gross income to determine whether you qualify, as well as your date of birth. If, after the math, you are eligible for the deduction, put in that amount on line 37.
On the very last line of the form (Part VI), you add up the amounts of any of the four deductions to get a final number. Then you put that number from line 38 on your Form 1040.
Can you file Schedule 1-A if you take the standard deduction?
Yes. Both itemizers and those who take the standard deduction are eligible to file a Schedule 1-A if they qualify for the new tax breaks.
The One Big Beautiful Bill Act created four new tax breaks found on Schedule 1-A:
The IRS has a detailed website that lists dozens of occupations that qualify for the tax break on tips.
Locate your VIN and then use the VIN Decoder from the National Highway Traffic Safety Administration. You’ll see the plant where final assembly took place. Keep a note of your VIN because you’ll need it to fill out Schedule 1-A.
