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 arising from the One Big Bad Bill Act (OBBBA). Read on to learn exactly what Schedule 1-A is and if you need it on your tax return.
Schedule 1-A (Form 1040) is a new form that helps you find new tax breaks that begin in 2025.
It goes along with Form 1040, which is your federal income tax form. There is also a 1040-SR for people age 65 or older. Both 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 such as student loan interest, self-employment taxes, and more.
This tax filing chapter is the new Schedule 1-A. This is another form of determining deductions, but it is only for those who have passed under the OBBBA:
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There is no tax on qualified cash receipts
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There is no tax on qualified overtime earnings
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There is no tax on qualified auto loan interest
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Deduction increase for seniors age 65 or older
Read more: 4 Ways A Big Beautiful Bill Can Lower Your Taxes
OBBBA, signed into law on July 4, 2025, created the four new deductions mentioned above. You can claim them for the 2025 tax year, and they’re available to those who take the standard deduction and those who itemize. Here’s a deep dive.
“No tax on tips” is for taxpayers who work in certain professions and receive tips.
There is a comprehensive list of hundreds of jobs on the IRS website. This includes many restaurant workers, many entertainers, hospitality workers, people in the health industry, and more.
Remember, only certain tips are eligible: The IRS defines eligible tips as “voluntary cash or charged tips received from customers or through tip sharing.”
The maximum deduction is $25,000, and that’s for taxpayers with an adjusted adjusted gross income (MAGI) of more than $150,000 if filing alone or $300,000 if filing jointly.
Another new deduction is for those who receive qualified overtime compensation. Taxpayers can deduct wages that exceed their normal wage rate. For example, if you get half-time for working overtime, you can deduct half.
The maximum deduction is $12,500 for a single filer and $25,000 for a joint filer, and it is more than $150,000 for those with MAGI if filing alone or $300,000 if filing jointly.
This deduction is only available for the purchase of a new car for personal use (not a lease) and only for certain types of cars.
The maximum deduction is $10,000, and it is phased out for those with MAGI of $100,000 ($200,000 for joint filers).
Here are the eligibility requirements:
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The loan must have been established in 2025.
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A vehicle is a car, minivan, van, SUV, pickup truck, or motorcycle.
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The vehicle’s gross weight rating is less than 14,000 pounds.
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The car made its final assembly in the United States. Use a VIN decoder to find the plant where the last assembly was done. Keep your VIN handy, because you’ll need it to fill out the Schedule 1-A form.
The last tax deduction included in the OBBBA is the additional deduction for seniors.
People age 65 or older can claim an additional deduction of $6,000 or $12,000 for married filers. This is on top of the standard deduction or your itemized deductions.
The deduction ends for taxpayers with more than $75,000 in MAGI ($150,000 for joint filers).
So, who needs to use this new Schedule 1-A? Only taxpayers who plan to take one of the four new deductions must file Schedule 1-A.
This is in addition to Schedule A if you itemize your taxes. You may also need to file Schedule 1 if you have any additional income such as unemployment payments, prize money, gambling winnings, or want to claim any deductions that appear on Schedule 1, such as student loan interest or self-employment tax. None of these schedules supersedes any other; They are in addition to others – so you can fill 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 will need them to complete Schedule 1-A. This is a two-page format; You only need to fill in the sections that apply to you.
Before you can fill out Schedule 1-A you’ll need some basic information, which has six parts. In addition to your name and Social Security number, you’ll need some numbers from your 1040 form, such as your adjusted gross income (MAGI), for part one.
If you qualify for the tip deduction (Part II), you’ll need several additional numbers, including the amount of tips you received. Then you will have to add, subtract, multiply, and divide to come up with a reasonable number of tips that you can subtract (see instructions below).
The “No tax on overtime” section (section 3) is similar. You’ll need your W-2 and other forms to list your eligible compensation. Then you will add, subtract, multiply, and divide to determine the amount you can subtract.
To not pay tax on the interest portion of the car loan (Part IV), you’ll need your VIN or VINs and anything you can deduct related to the vehicle on another schedule, such as for business as a sole proprietor (Schedule C), excess income or loss (Schedule E), or use on a farm (Schedule F).
After doing some math, you’ll end up with your “qualified passenger car loan interest deduction” amount.
Part of the enhanced deduction for seniors is a little easier (Part V): You need your modified adjusted gross income to determine if you qualify, as well as your date of birth. If, after the math, you qualify for the deduction, put that amount on line 37.
On the last line of the form (Section VI), you add the sum of the four deductions to get the final number. Then you enter this number on line 38 of your Form 1040.
Can you file Schedule 1-A if you take the standard deduction?
yes. Both itemizers and those taking the standard deduction are eligible to file Schedule 1-A if they qualify for the new tax break.
The Big Beautiful bill created four new tax breaks found in Schedule 1-A:
The IRS has a detailed website that lists dozens of occupations that qualify for tax breaks in the guidelines.
Find your VIN and then use a VIN decoder from the National Highway Traffic Safety Administration. You will see the plant where the final assembly took place. Keep a note of your VIN because you’ll need it to fill out Schedule 1-A.
