Tax year 2026
Which OBBBA deductions apply to you
Which of the four new Schedule 1-A deductions can actually reach you on a 2026 return, in what order to check them, and the mistakes that cost people money.
Published September 8, 2026 · updated September 17, 2026
Most of the coverage of the One Big Beautiful Bill Act has been about four deductions with catchy names. This is the short version of which of them can actually reach you, and in what order to think about them.
Start with the form, not the headlines
Four of the new deductions live on one page: Schedule 1-A, a new form filed with your 1040. Tips, overtime, vehicle loan interest and the senior deduction all sit there, they are all totalled at the bottom, and the total lands on your 1040 below the adjusted gross income line.
That placement matters more than it sounds. Because they come off after AGI, they reduce the income you are taxed on but not your AGI itself — so they do not help you qualify for anything else that is means-tested on AGI. They also do not reduce Social Security or Medicare tax. A tipped worker still pays FICA on every dollar of reported tips.
None of the four requires you to itemize. You can take the standard deduction — $16,100 for a single filer this year, $32,200 filing jointly — and still claim all four.
The four, in one table
| Deduction | Cap | Phase-out starts | Runs through |
|---|---|---|---|
| Tips | $25,000 per return | $150,000 / $300,000 | 2028 |
| Overtime | $12,500 / $25,000 | $150,000 / $300,000 | 2028 |
| Vehicle loan interest | $10,000 per return | $100,000 / $200,000 | 2028 |
| Senior deduction | $6,000 per person 65+ | $75,000 / $150,000 | 2028 |
Every figure in that table comes out of the site’s data file rather than being typed into this article, which is why it will still be right after next year’s refresh.
Work through it in this order
Do you receive tips? Only if your occupation is on the Treasury list — there are 71 of them, and the official titles are broader than everyday job titles. Check yours, because nothing else about the tips deduction matters if the answer is no.
Do you work FLSA-required overtime? Not any overtime — overtime your employer owes you under the federal Fair Labor Standards Act. And only the premium half of it. Rebuild the figure if your employer has not given you a standalone total, which most have not.
Did you buy a new car on finance? The vehicle has to be new, bought for personal use, finally assembled in the United States, and the loan secured by it. If any of those is false, stop. Run the six tests — the checker can also work the year’s interest out from your loan terms.
Are you or your spouse 65 or over? The senior deduction is per qualifying person, so a couple where both qualify claims it twice. A couple where one qualifies claims it once — the larger figure quoted in the press is two people, not a couple’s allowance. Work out your share.
Once you know which apply, the deduction estimator puts all four together.
What stacks and what does not
All four stack with each other and with the standard deduction. A married couple who both work tipped jobs, both work overtime, financed a car and are both over 65 could in principle claim all four at once.
The senior deduction also stacks with the existing age-65 addition to the standard deduction under § 63(f). They are different provisions with different amounts and they are not alternatives.
What does not stack is the phase-out. Each deduction has its own threshold and its own taper, and they are measured against the same modified adjusted gross income. Cross one threshold and you have usually crossed several.
Two changes that are not new deductions
SALT. The cap on deductible state and local taxes rose to $40,400, but it only helps if you itemize — and raising it is precisely what pushes some people into itemizing for the first time in years. It tapers back down for high earners and stops at a floor rather than reaching zero.
Charity. From this year you can deduct cash gifts without itemizing, up to $1,000 ($2,000 on a joint return), and unlike the four above that one is permanent. If you do itemize, a new floor applies instead: only giving above a set share of your AGI counts at all.
Common mistakes
Treating a service charge as a tip. An automatic gratuity is not a tip, and the final regulations said so explicitly. This is the single biggest source of overstated tips deductions.
Deducting the whole overtime paycheck. Only the premium portion qualifies — the extra half in time-and-a-half, not the full overtime wage.
Filing separately. Tips, overtime and the senior deduction all require a married taxpayer to file jointly. Filing separately does not reduce them; it removes them.
Expecting a refund equal to the deduction. A deduction reduces the income you are taxed on, so it saves the tax on that income, not the deduction itself — a $1,000 deduction taken entirely within the 22% bracket saves $220, not $1,000. It saves less if it reaches down into a lower bracket, and nothing at all if your income is too low to owe federal income tax.
Assuming your filing status behaves consistently. It does not. A qualifying surviving spouse takes the joint standard deduction and the joint rate table, but the single figures for tips, overtime and the senior deduction. There is no principle there to reason from — you have to read the form.