The four new deductions on Schedule 1-A
Tips, overtime, car loan interest and the senior bonus — what each one actually covers, and what it does not.
They are additional, not alternative
All four sit on top of the standard deduction. You do not have to itemise to claim any of them, which is unusual and is the single most misunderstood point about the new rules.
Each has its own cap
Tips are capped at $25,000, overtime at $12,500 for single filers and $25,000 for joint filers, car loan interest at $10,000, and the senior bonus at $6,000 per qualifying person.
Each has its own phase-out
Tips and overtime start reducing above $150,000 of MAGI. Car loan interest starts at $100,000 and reduces twice as fast. The senior bonus starts at $75,000 and falls by 6% of the excess. A single income figure can leave one intact and wipe out another.
They are temporary
All four apply to tax years 2025 through 2028 unless Congress acts. Planning that assumes they are permanent is planning on an assumption, not a rule.
Payroll tax is unchanged
Deducted tips and overtime still attract Social Security and Medicare tax, and most states tax them normally. Only federal income tax is reduced.
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