The Internal Revenue Service published, for tax year 2025, a new schedule that you can use to take advantage of some tax benefits provided the “One, Big, Beautiful Bill” (OBBB), including no tax on tips, no tax on overtime, no tax on car loans, and no tax on seniors.
Schedule 1-A and its related instructions (included in the Form 1040 Instructions) allow taxpayers to deduct amounts for tips, overtime, car loans, and the enhanced deduction for seniors.
Part II of the new instructions explains how to determine the amount of qualified tips, how to claim the deduction, up to $25,000, and the phaseout for modified adjusted gross income greater than $150,000 ($300,000 for married taxpayers filing joint returns). Workers can claim this deduction whether they claim the standard deduction or itemize.
Part III of the new instructions explains how to claim a deduction for overtime compensation you may have received. To claim this deduction, you must file a joint return if you are married. Workers can claim this deduction whether they claim the standard deduction or itemize.
Part IV of the new instructions explains how taxpayers can claim a deduction for car loan interest. You can deduct qualified passenger vehicle loan interest whether you claim the standard deduction or itemize.
Part V describes the enhanced deduction for seniors, which can be claimed whether you take the standard deduction or itemize; to claim the deduction, married couples must file jointly.
To qualify for the enhanced deduction, the taxpayer (and/or the taxpayer’s spouse, if filing a joint return) must have been born before Jan. 2, 1961. The taxpayer must have a valid Social Security number; if married filing jointly, each spouse who is claiming the enhanced deduction for seniors must have a valid SSN.
The maximum enhanced deduction for seniors is $6,000 per person. For married filing jointly, if both spouses were born before Jan. 2, 1961, and both have a valid SSN, the enhanced deduction for seniors is $12,000. The $6,000-per-person amount is reduced if the MAGI exceeds $75,000 ($150,000 for married couples filing jointly).
For more information about these tax benefits, please contact our office.