The four new federal deductions that took effect for the 2025 tax year all go on one new form, Schedule 1-A, which the IRS calls “Additional Deductions.” The IRS says the form is attached to Form 1040, 1040-SR or 1040-NR, and a filer does not have to itemize to use it, according to the agency’s Schedule 1-A fact sheet.

The four deductions are for tips, overtime pay, car-loan interest and a new deduction for seniors. Each has its own cap.

That answers the question many filers are asking: which form do I need, and do I have to itemize to get these? The form is Schedule 1-A, and the answer on itemizing is no. The IRS’s tax tip on the new deductions says they are available to both itemizing and non-itemizing taxpayers, so someone taking the standard deduction can still claim them. The total from Schedule 1-A goes on line 13b of Form 1040.

For a household with someone 65 or older, the part of Schedule 1-A that matters most is the senior deduction of up to $6,000 per person. The Retirement Tax & Withdrawal Planner covers the senior deduction and includes four calculators (provisional income, IRMAA tier, RMD schedule, Roth bracket fill), along with the account withdrawal order.

Work through the $6,000 senior deduction in the Withdrawal Planner before filling in Schedule 1-A →

The four deductions and their caps

The IRS fact sheet lists the caps and who can use each deduction:

• Tips: up to $25,000 per return, for workers with qualified tips in listed occupations reported on a W-2, a 1099, another statement or Form 4137.
• Overtime: up to $12,500, or $25,000 for married couples filing jointly, for qualified overtime pay.
• Car-loan interest: up to $10,000, for interest on a qualifying vehicle loan.
• Senior deduction: up to $6,000 per person age 65 or older, or $12,000 if both spouses are 65 or older and file jointly.

All four phase out at higher incomes. For the senior deduction, the IRS lists phase-outs at $75,000 and $150,000, according to its page on the tax-cut law’s provisions for individuals and workers. The fact sheet does not list the thresholds for the other three and sends filers to that page, and Part I of the schedule works out the filer’s modified adjusted gross income.

Rules that trip people up

For tips, overtime and the senior deduction, the filer needs a valid Social Security number for employment, and married couples have to file jointly to claim them. The car-loan deduction has its own test: the loan must have been taken out after December 31, 2024, to buy a new vehicle for personal use, and it must be secured by a first lien. Leases do not qualify, and the filer has to report the vehicle identification number.

The deductions are not permanent. The IRS says they apply to tax years 2025 through 2028, so Schedule 1-A is expected to be a feature of returns for four years running. The first of those returns is the one for 2025.

Where the senior deduction fits

The senior deduction is claimed through Schedule 1-A, so a retiree who takes the standard deduction still uses it. The IRS’s 2026 estimated-tax instructions, Form 1040-ES, confirm that the deduction continues into 2026 at $6,000 per person, or $12,000 for a couple.

Because the deduction phases out with income, a retiree with a large pension or big withdrawals from retirement accounts can see it shrink. Income, not just age, decides who gets the full amount.

Working out which of the four deductions a household can claim

The free starting point is the IRS fact sheet linked above, which walks through each deduction and what the schedule asks for. Read it with last year’s return and this year’s pay records beside it, because each deduction depends on documents the filer should already have.

For tips and overtime, that means the W-2 or 1099 and any statement from the employer breaking out qualified amounts. For car-loan interest, it means the lender’s year-end statement and the vehicle identification number. For the senior deduction, it means each spouse’s birth date and Social Security number. Gathering these first shows quickly which parts of Schedule 1-A apply and which do not.

The line to remember is 13b of Form 1040, where the schedule’s total lands. A filer using tax software should find Schedule 1-A in the interview, but someone filing on paper needs to attach the form. The IRS says the deductions are available whether or not a filer itemizes, so there is no reason to switch methods just to claim them.

A $6,000 senior deduction that shrinks with income

Because the IRS lists phase-outs of $75,000 and $150,000 for the senior deduction, retirement withdrawals can decide how much of the $6,000 survives. The Retirement Tax & Withdrawal Planner covers the senior deduction and the account withdrawal order, with four calculators (provisional income, IRMAA tier, RMD schedule, Roth bracket fill).

Plan the withdrawal order that protects the senior deduction with the Withdrawal Planner →

This article was produced with AI assistance and edited for accuracy against the sources linked above.