It’s official—the IRS is rolling out the new Schedule 1-A form, which will allow taxpayers to deduct overtime, tips, car interest, and other benefits never before seen on 2025 tax returns
The IRS has introduced a new form, the Schedule 1-A, that will make a huge impact on the new tax season of 2025. This measure is part of the law known as One Big Beautiful Bill and it aims to give millions of paytaxers access to deductions that weren’t available before. Among them it stands out the ones related to tips, overtime, car loan interest, and new pension-related benefits. This is a really important thing for Americans, so let’s find out more about this.
The IRS wants to make the processing of tax filling easier to understand for the average paytaxer. The Schedule 1-A form will be used along with the traditional Forms 1040 and 1040-SR. According to an initial analysis, this novelty aims to ease calculation of deduction that many middle- and working-class Americans were previously unable to claim.
The Schedule 1-A includes 4 main points that everybody should know:
The IRS points out that this new way is mainly aimed to service workers, hourly employees, car buyers, and retirees. For restaurant and hospitality workers, the tips deduction is considered a high expected relief. At the same time, retirees who depend on fixed income could experience a relief regarding the increase of the cost-of-living (COLA) thanks to the additional deduction.
Even though deductions sound very attractive, the IRS establishes strict rules of eligibility. Every deduction is reduced gradually as the income increases. What’s more, the requirements are strict too:
Tax experts warn about the importance of documents. To make the most of these deductions, it will be necessary proof of reported tips, pay stubs that clearly show overtime premiums, and contracts for new car loans. The IRS has made it clear: they will check very carefully all the information.
There is something else you should pay attention to: deductions aren’t permanents. According to the IRS, they will be available only until the 2028 tax year unless Congress chooses to extend them in the future.
The great thing about this measure is that it represents tax relief for workers. Waiters, retail employees, and gig economy workers could see hundreds or even thousands of dollars refunded thanks to deductions for tips and overtime. Car buyers and seniors will also feel the impact, provided they follow the rules and maintain proper documentation.
So, as you can see, many people can benefit from these deductions and if you are part of these groups we previously mentioned, you need to pay attention to all the documents and file with accuracy under the updated IRS guidelines.
© 2025 Unión Rayo
© 2025 Unión Rayo

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