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 Beautiful Bill Act (OBBBA). Continue reading to learn what exactly Schedule 1-A is and whether you need it to file your tax return.
Schedule 1-A (Form 1040) is a new form that will help you determine new tax exemptions that began 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 and older. Both the regular Form 1040 and Form 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 others.
New this tax filing season is Schedule 1-A. It is another way to calculate deductions, but it is only for those approved according to the OBBBA:
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No tax on qualified cash tip income
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No taxes on qualified overtime earnings
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No taxes on qualified vehicle loan interest
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The increased deduction for seniors aged 65 or older
Read more: Four Ways One Big Beautiful Bill Could Reduce Your Taxes
The 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 are available to those who take the standard deduction and those who itemize. Here’s a deeper dive.
“No tip tax” is for taxpayers who work in certain occupations and receive tips.
There is a complete list of hundreds of jobs on the IRS website. It includes most restaurant workers, many artists, hospitality workers, people in the wellness industry, and more.
Remember, only certain tips qualify: The IRS defines qualified tips as “voluntary money or collected tips received from customers or through the exchange of tips.”
The maximum deduction is $25,000 and phases out for taxpayers with a modified adjusted gross income (MAGI) greater than $150,000 if filing alone or $300,000 if filing jointly.
Another new deduction is for people who receive qualified overtime compensation. Taxpayers can deduct payment that exceeds their regular payment rate. For example, if you receive time and a half for working overtime, you can deduct half.
The maximum deduction is $12,500 for a single filer and $25,000 for joint filers, and phases out for those with a MAGI greater than $150,000 if filing alone or $300,000 if filing jointly.
This deduction is only available for new car purchases for personal use (no lease) and only for certain types of cars.
The maximum deduction is $10,000 and phases out for those with a MAGI greater than $100,000 ($200,000 for joint filers).
These are the eligibility requirements:
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The loan must have been originated in 2025.
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The vehicle is a car, minivan, van, SUV, van, or motorcycle.
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The gross vehicle weight rating is less than 14,000 pounds.
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The car underwent final assembly in the United States. Use the VIN decoder to find the plant where final assembly was performed. Have your VIN handy, as you will need it to complete the Schedule 1-A form.
The last new tax deduction included in the OBBBA is an extra deduction for seniors.
Individuals age 65 or older can claim an additional deduction of $6,000 or $12,000 for married filers. This is in addition to 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 must file a Schedule 1-A.
This is in addition to Schedule A if you itemize your taxes. You may also need to file a Schedule 1 if you have additional income such as unemployment payments, prize money, gambling winnings, or want to claim any deductions that appear on the schedule, such as student loan interest or self-employment taxes. None of these schedules replace another; They are additional to the others, so you may end up completing all three.
If you do not qualify for any of the four deductions on Schedule 1-A, you do not need to complete it.
Get your calculator ready and improve those math skills. You will need them to complete Schedule 1-A. It is a two-page form; You only need to complete the parts that apply to you.
You will need basic information before completing 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, such as your modified adjusted gross income (MAGI), for Part I.
If you qualify for the tip tax-free deduction (Part II), you will need several additional numbers, including the amount of tips you received. Then you’ll need to add, subtract, multiply, and divide to get the amount of qualified tips you can deduct (see instructions below).
The “no overtime tax” section (Part III) is similar. You will need your W-2 and any other forms that indicate qualified compensation. Then you will add, subtract, multiply, and divide to determine the amount you can deduct.
For the tax-free interest on auto loans section (Part IV), you’ll need your VIN or VIN and anything you can deduct related to that vehicle on another schedule, such as for a sole proprietorship business (Schedule C), supplemental income or loss (Schedule E), or use on a farm (Schedule F).
After doing some math, you’ll get the amount of your “qualified passenger vehicle loan interest deduction.”
The section on the enhanced senior deduction is a little simpler (Part V): you need your modified adjusted gross income to determine if you qualify, as well as your date of birth. If, after doing the calculations, you are eligible for the deduction, enter that amount on line 37.
On the last line of the form (Part VI), add the amounts of any of the four deductions to get a final number. Then enter 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 created four new tax breaks found in Schedule 1-A:
The IRS has a detailed website that lists dozens of occupations that qualify for the tip tax exemption.
Locate your VIN and then use the National Highway Traffic Safety Administration’s VIN decoder. You will see the floor where the final assembly took place. Take note of your VIN because you will need it to complete Schedule 1-A.