Schedule 1-A is where the four temporary deductions from the 2025 tax law are claimed. Its total moves to Form 1040 and lowers your taxable income, whether or not you itemize.
The five parts
| Part | What it does | Calculator |
|---|---|---|
| Part I | Works out modified AGI used by every phase-out | All calculators |
| Part II | No tax on tips, up to $25,000 | Tips |
| Part III | No tax on overtime, up to $12,500 ($25,000 joint) | Overtime |
| Part IV | Car loan interest, up to $10,000 | Car loan |
| Part V | Enhanced senior deduction, $6,000 per person | Seniors |
Modified AGI in plain words
For most people, modified AGI is simply the adjusted gross income on line 11 of Form 1040. It's higher only if you exclude foreign earned income or income from Puerto Rico or certain U.S. territories. Schedule 1-A deductions don't reduce AGI themselves.
The three phase-out formulas
- Tips and overtime: minus $100 for every full $1,000 over $150,000 ($300,000 joint).
- Car loan interest: minus $200 for every $1,000, or fraction of $1,000, over $100,000 ($200,000 joint).
- Seniors: each $6,000 minus 6% of the amount over $75,000 ($150,000 joint).
Who must file jointly
Married people must file a joint return to claim the tips, overtime and senior deductions. You also need a Social Security number on the return (valid for work, for tips and overtime). Car loan interest requires the vehicle's VIN.
Estimate all four together or read about W-2 code TT.
Sources
- IRS FS-2025-03: Tax deductions for working Americans and seniors
- IRS: Tax year 2026 inflation adjustments (Rev. Proc. 2025-32)
- IRS: Schedule 1-A and instructions
- PwC summary of IRS Fact Sheet 2026-13 (overtime FAQs, Aug. 6, 2026)
See how Taxlumo calculates for every formula and test case.