Schedule 1-A
Tax Glossary Term
Definition
Schedule 1-A is a new IRS form introduced by the OBBBA (One Big Beautiful Bill Act) for reporting the new above-the-line deductions for qualified tips, overtime premiums, and the senior bonus deduction. It attaches to Form 1040 and feeds into Schedule 1, Line 26 (or a new designated line) to reduce your Adjusted Gross Income. Because these are above-the-line deductions, they work regardless of whether you take the standard deduction or itemize, and you get the benefit on top of either. The form has three main sections: Part I for the qualified tips deduction (IRC Section 224, up to $25,000), Part II for the overtime premium deduction (IRC Section 225, up to $25,000), and Part III for the senior bonus deduction ($6,000 for taxpayers age 65 or older). Each section pulls amounts from your W-2 Box 12 codes (TP for tips, OT for overtime) or age verification. The form also calculates the MAGI-based phase-out that applies to tips and overtime deductions — reducing the deduction by 10.0% of MAGI above $150,000 single or $300,000 MFJ. The senior bonus has its own phase-out at 6.0% of MAGI above $75,000 single or $150,000 MFJ. Married filing separately filers cannot claim the tips or overtime deductions. Schedule 1-A is effective for tax years 2025 through 2028.
Example
Qualified tips (W-2 Code TP): $18,000
Overtime premium (W-2 Code OT): $4,000
Senior bonus (age 67): $6,000
MAGI: $120,000 (no phase-out)
Total Schedule 1-A deduction: $28,000