Starting in tax year 2025, taxpayers will use a new Schedule 1-A to claim deductions created by the “One, Big, Beautiful Bill,” including deductions for tips, overtime pay, car loan interest, and seniors.
Overview
The IRS released Schedule 1-A and updated Form 1040 instructions explaining how taxpayers will claim several new deductions enacted in the One, Big, Beautiful Bill.
The schedule consolidates four new deductions:
tips
overtime compensation
passenger vehicle loan interest
enhanced deduction for seniors
These deductions apply beginning with 2025 tax returns and can be claimed whether a taxpayer takes the standard deduction or itemizes.
How the New Deductions Work
The instructions break the deductions into separate sections.
Deduction for tips
Workers can deduct qualified tips up to $25,000.
Key requirements:
Tips must be reported as income
Married taxpayers must file jointly
Deduction phases out when MAGI exceeds $150,000 ($300,000 joint)
The IRS instructions include worksheets and examples to …
