How to Fill Out and Submit Schedule 1-A (Form 1040): Tips, Overtime, Interest

Schedule 1-A on Form 1040 is the new attachment you use to claim four deductions created by the One, Big, Beautiful Bill Act: qualified tips, qualified overtime pay, interest on a qualifying car loan, and an enhanced deduction for taxpayers 65 or older.¹ You fill in only the parts that apply to your situation, calculate your modified adjusted gross income in Part I so each deduction’s phaseout can be applied, then carry the combined total on line 38 to Form 1040, line 13b. The deductions stack on top of your standard or itemized deduction, and they run for tax years 2025 through 2028.²

Who Needs to File Schedule 1-A

File the schedule if any one of these applied to you in 2025:

You received reported tips in a customarily tipped occupation (servers, bartenders, hair stylists, rideshare drivers, and similar roles). Up to $25,000 of qualified tips is deductible.
You earned overtime pay as an employee or contractor. Up to $12,500 is deductible, or $25,000 for joint filers.
You paid interest on a car loan originated after December 31, 2024, on a personal-use vehicle. Up to $10,000 of interest is deductible.
You were 65 or older (born before January 2, 1961). Up to $6,000 is deductible per qualifying spouse, or $12,000 if both spouses on a joint return qualify.¹

Two conditions run through every part of the form. You need a valid Social Security number, and if you’re married you must file jointly. Married filing separately disqualifies you from all four deductions.³ If none of the four situations applies, don’t file the schedule at all. If only one or two apply, complete just those parts and leave the rest blank.

What to Gather Before You Start

Each part of the form draws on different paperwork. Pull everything together up front so you’re not stopping mid-form to hunt for a lender statement.

Tips: Form W-2 (box 7 for reported tips), Form 4137 if you had tips not reported to your employer, and any 1099-NEC, 1099-MISC, or 1099-K showing self-employment tip income.⁴
Overtime: W-2 (box 1 includes overtime compensation) or a 1099-NEC/1099-MISC if the overtime came through contract work.
Car loan: the loan agreement showing the origination date and first-lien status, the vehicle identification number (which you enter on the form itself), and a year-end interest statement from the lender.
Senior deduction: no supporting document, just your date of birth and Social Security number.³

You also need Form 1040 completed through line 11b, since Part I of Schedule 1-A uses that figure as the starting point for MAGI.⁵

Part I: Modified Adjusted Gross Income

Every phaseout on Schedule 1-A keys off your modified adjusted gross income, so the form begins here. Copy the amount from Form 1040, line 11b, onto Schedule 1-A, line 1. For most filers that number moves straight to line 3 and becomes the MAGI used throughout the rest of the form.⁵

Lines 2a through 2e exist for a narrower group: taxpayers who excluded Puerto Rico income, or who filed Form 2555 (Foreign Earned Income) or Form 4563 (Exclusion of Income for Residents of American Samoa). Those excluded amounts get added back before you write your MAGI on line 3. Everyone else skips 2a–2e.⁴

Part II: Qualified Tips

The tips deduction caps out at $25,000 per return, and that cap does not double for joint filers.¹ Tips have to be “qualified,” meaning received in an occupation where tipping is customary and regular, and they have to be reported. Cash tips you never disclosed to your employer or on your tax return don’t count. The IRS instructions publish lists of qualifying occupations and worked examples.³

Line 4a captures the qualified tips shown in box 7 of your W-2. Line 4b is for tips reported on Form 4137. On line 4c you combine those figures, or, if you had only one employer, you use the larger of 4a or 4b. Self-employment tips from 1099-NEC, 1099-MISC, or 1099-K go on line 5. Line 6 totals your tip income, and line 7 caps it at $25,000.⁴

Then comes the phaseout. Enter your MAGI on line 8 and $150,000 on line 9 ($300,000 if filing jointly). If your MAGI is at or below that threshold, the line 7 amount flows through to line 13 as your full deduction. If it’s above, lines 10 through 12 walk you through the reduction. Line 13 is the final qualified tips deduction.

Part III: Qualified Overtime

Overtime works the same way. W-2 employees and self-employed workers who earned overtime can deduct up to $12,500, or $25,000 for joint filers.¹

Line 14a is qualified overtime from W-2 box 1. Line 14b captures overtime paid through a 1099-NEC (box 1) or 1099-MISC (box 3). Line 14c totals them. Line 15 applies the cap. Lines 16 through 20 handle the phaseout, using the same $150,000 single / $300,000 joint threshold as tips. Line 21 is your final overtime deduction.⁴

Part IV: Car Loan Interest

This part deducts up to $10,000 of interest paid on a qualifying vehicle loan, and it’s the part where filers most often find they don’t qualify.²

Loan and Vehicle Rules

All three of these have to be true for the interest to count as qualified passenger vehicle loan interest:

The loan was originated after December 31, 2024.
The proceeds were used to buy a passenger vehicle for personal use. Lease payments do not qualify.
The loan is secured by a first lien on the vehicle.¹

The vehicle itself must be a car, minivan, van, SUV, pickup truck, or motorcycle with a gross vehicle weight rating under 14,000 pounds, and it must have undergone final assembly in the United States.² Financing that predates 2025 and any lease arrangement are out.

Lines 22 Through 30

Line 22 asks for the VIN and interest paid for each qualifying vehicle. If part of the interest was already deducted on Schedule C, E, or F because the vehicle has business use, only the personal-use portion goes in column (iii). The form’s columns are designed to prevent double-counting, but only if you fill them in correctly.⁴ Line 23 totals qualifying interest, line 24 caps it at $10,000, and lines 25 through 30 apply the phaseout. Note the lower threshold here: $100,000 MAGI for single filers, $200,000 for joint. Line 30 is your final car loan interest deduction.

Part V: Enhanced Senior Deduction

Taxpayers 65 or older can claim up to $6,000, on top of any standard or itemized deduction they already take. If both spouses on a joint return qualify, the combined deduction runs up to $12,000. For 2025, you qualify by being born before January 2, 1961.³

The senior phaseout starts at the lowest MAGI of any part on the form: $75,000 for single filers, $150,000 for joint. Each spouse claiming the deduction needs a valid Social Security number, and married taxpayers must file jointly.²

How the Phaseout Math Works

All four parts use the same reduction formula. Learn it once and each section moves quickly. Take a single filer with $165,000 MAGI claiming the tips deduction:

Subtract the threshold from your MAGI: $165,000 − $150,000 = $15,000.
Divide by $1,000: 15. If the result isn’t a whole number, round down.
Multiply by $100: $1,500. That’s your reduction.
Subtract from the capped deduction. On $25,000 in qualified tips, the deduction drops to $23,500.

The deduction eventually zeroes out. On the $25,000 tips cap that happens at $400,000 MAGI. On the $6,000 senior deduction it happens at $135,000 for a single filer. Most tipped and overtime workers will sit well below the phaseout range entirely.

Phaseout Thresholds at a Glance

Tips ($25,000 cap): phaseout begins at $150,000 MAGI, $300,000 joint.⁴
Overtime ($12,500 / $25,000 joint cap): phaseout begins at $150,000 MAGI, $300,000 joint.
Car loan interest ($10,000 cap): phaseout begins at $100,000 MAGI, $200,000 joint.²
Senior deduction ($6,000 / $12,000 joint cap): phaseout begins at $75,000 MAGI, $150,000 joint.

Transferring Your Total to Form 1040

Add the results from lines 13, 21, 30, and your senior deduction figure. That combined total goes on line 38 of Schedule 1-A, then on Form 1040 (or 1040-SR), line 13b. Form 1040-NR filers use line 13c instead.⁵

These deductions sit alongside your standard or itemized deduction rather than replacing it. Even if you take the full standard deduction, the Schedule 1-A amount stacks on top and further reduces the income you owe tax on.⁵

Submitting the Schedule

If you e-file, your tax software attaches Schedule 1-A automatically as part of the transmitted return. Paper filers arrange all schedules and forms by the sequence number printed in the upper right corner of each page and place Schedule 1-A behind Form 1040 in that order.⁶ E-filing catches common errors, like missing Social Security numbers or mismatched totals, before the return is officially accepted, which avoids processing delays later.⁷

Common Mistakes to Avoid

Claiming car loan interest on a lease. Only interest on a purchase loan secured by a first lien qualifies.¹
Filing as married filing separately. All four deductions require joint filing for married taxpayers.
Using the wrong MAGI threshold. Car loan interest phases out at $100,000 and the senior deduction at $75,000, both lower than the $150,000 threshold that applies to tips and overtime. A wrong threshold breaks the phaseout calculation.
Double-counting vehicle interest. Interest already deducted on Schedule C, E, or F for business use cannot appear again on Schedule 1-A. Only the personal-use remainder goes here.⁴
Claiming tips that weren’t reported. Only tips appearing on a W-2, Form 4137, or a 1099 are deductible.³

How Long Schedule 1-A Will Matter

The tips, overtime, and car loan interest deductions apply to tax years 2025 through 2028. The enhanced senior deduction does not carry a stated expiration in the same provisions.² Absent an extension from Congress, the schedule will stop being relevant for most filers after the 2028 season. Schedule 1-A is also separate from Schedule 1, which continues to report additional income and above-the-line adjustments; if you have freelance income or a student loan interest adjustment plus one of the new deductions, you’ll file both.¹

1
Internal Revenue Service. Schedule 1-A, Additional Deductions: What to Know About the New Form
2
Internal Revenue Service. One, Big, Beautiful Bill Act: Tax Deductions for Working Americans and Seniors
3
Internal Revenue Service. IRS Published Schedule Taxpayers Will Use to Claim Deductions on No Tax on Tips, No Tax on Overtime, No Tax on Car Loans, No Tax on Seniors
4
Internal Revenue Service. 2025 Schedule 1-A (Form 1040)
5
Internal Revenue Service. Instructions for Form 1040
6
Internal Revenue Service. Topic No. 301, When, How and Where to File
7
Internal Revenue Service. Checklist of Common Errors When Preparing Your Tax Return