Schedule 1-A 2026 draft: every line that changed from 2025

The IRS does not usually let a tax form change shape twice in two years, but Schedule 1-A is not a usual form. It was created for the 2025 tax year to carry the four deductions the One Big Beautiful Bill Act added — no tax on tips, no tax on overtime, no tax on car loan interest, and an enhanced deduction for seniors — and on September 4, 2026, the IRS posted a 2026 draft that restructures three of those four sections almost line by line. The dollar amounts a filer can claim have not changed. Where those dollars have to be documented has changed a great deal.

The short answer. The 2026 draft of Schedule 1-A replaces the single tip and overtime entry lines of 2025 with per-employer tables that key off specific W-2 and 1099 boxes, adds a brand-new Part IV question pair about a vehicle’s original use and US assembly, and shifts the age cutoff for the senior deduction forward one year to a birth date before January 2, 1962. The total the schedule produces — line 44 on the draft, line 38 on the 2025 form — is instructed to land on Form 1040 line 13a rather than 2025’s line 13b. None of the underlying caps or MAGI phase-out thresholds moved. The other 2026 draft that carries the new law, Schedule A for itemizers, is covered in Schedule A 2026 draft: every line that changed.

Part I stays exactly where it was: the MAGI computation

Every one of the four deductions phases out based on modified adjusted gross income, and Part I of the schedule — the part that builds that MAGI figure — is identical in the draft and the final 2025 form, down to the line numbers. Line 1 pulls the amount from Form 1040, 1040-SR, or 1040-NR, line 11b (adjusted gross income). Lines 2a through 2d add back income from Puerto Rico that was excluded, the foreign earned income exclusion from Form 2555 line 45, the foreign housing exclusion or deduction from Form 2555 line 50, and the American Samoa income exclusion from Form 4563 line 15. Line 2e totals those four add-backs, and line 3 adds line 1 and line 2e to produce MAGI. Every phase-out later in the schedule, in both years, measures against that same line 3 figure. Our line-by-line guide to AGI on Form 1040 covers how line 11b itself is built from the return’s income lines, which is the piece Schedule 1-A takes as given.

No tax on tips: one line becomes a five-employer, three-1099 table

On the 2025 form, an employee with qualified tips filled in a single amount on line 4a (tips included in Form W-2, box 7), and someone with tips from self-employment filled in a single amount on line 5, tied to Form 1099-NEC box 1, Form 1099-MISC box 3, or Form 1099-K box 1a. The 2026 draft turns both into tables.

Line 4 of the draft now provides five rows (4a through 4e), each asking for an employer’s name and its EIN, then column (iii) — “Qualified tips included in Form W-2, box 12, code ‘TP’” — and column (iv), the amount from Form 4137, line 1, column (c), with column (v) taking the larger of the two. That box 12 code is new terrain for most filers, and our complete list of W-2 box 12 codes explains where code TP (and its overtime counterpart, TT) sits among the others employers report there.

Line 6 does the same for tips earned running a trade or business, again across five rows, but with more columns than the employee side: column (iii) is net profit from Schedule C line 31, the sum of Schedule E line 28(g) through 28(k), or Schedule F line 34; column (iv) is other allocable deductions; column (v) subtracts (iv) from (iii). Three more column pairs then bring in outside verification — the taxpayer identification number and qualified tip amount from up to three separate information returns, specifically Form 1099-NEC box 1(b), Form 1099-MISC box 13(a), or Form 1099-K box 1(c). Those three boxes are not referenced on the 2025 form; the IRS’s own guidance on Form 1099-K confirms that a third-party payment platform issues that form once a filer’s payments for goods or services exceed $20,000 across more than 200 transactions, which is the population column (xii) is built to catch. Column (xiii) takes the smaller of the profit-based figure in column (v) or the 1099-based total in column (xii) — a filer cannot claim more in tip deduction than either the business showed as profit or the payment forms documented.

From there the arithmetic is unchanged. Lines 5 and 7 total the employee and business tables; line 8 adds them; line 9 caps the sum at $25,000; lines 10 through 12 subtract the $150,000 ($300,000 MFJ) MAGI threshold; line 13 divides the excess by $1,000 and rounds down; line 14 multiplies by $100; line 15 is the deduction. That is the same five-step phase-out the 2025 form ran on lines 8 through 13 — only two lines later, because the tables above it grew.

No tax on overtime: the same restructuring, on a shorter form

Overtime gets the identical treatment on a smaller scale. The 2025 form asked for one figure on line 14a (overtime in Form W-2 box 1) and one on line 14b (overtime on a 1099). The 2026 draft’s Part III opens with a five-row table, lines 16a through 16e, for overtime reported in Form W-2 box 12 under code “TT,” followed by lines 18a through 18e for overtime on Form 1099-NEC box 1d or Form 1099-MISC box 14. Line 17 totals the W-2 table, line 19 totals the 1099 table, and line 20 adds them — replacing the 2025 form’s single addition on line 14c.

The phase-out again keeps its shape: line 21 caps the total at $12,500, or $25,000 if married filing jointly; lines 22 through 24 subtract the same $150,000 ($300,000 MFJ) threshold used for tips; line 25 divides by $1,000 and rounds down; line 26 multiplies by $100; line 27 is the deduction. In 2025 that same sequence ran from line 15 to line 21.

No tax on car loan interest: a deduction that now leans on its own information return

Part IV did not just get more rows in the 2026 draft — it gained a documentation requirement the 2025 form never had. Both years cap the deduction to qualified passenger vehicle loan interest reported for up to two vehicles by VIN (more require a statement per the instructions), and both years use the identical $10,000 cap and $100,000 ($200,000 MFJ) MAGI threshold. What is new is that “certain vehicle loan interest paid in 2026 should be reported to you on Form 1098-VLI, box 1,” an information return the 2025 form does not reference at all, and column (iii) of the draft’s line 28 is explicitly defined as the total interest reported there minus whatever portion was already deducted on Schedule C, E, or F.

The draft also adds two yes-or-no questions for each vehicle that the 2025 form left implicit in its instructions rather than printed on the form itself: whether the original use of the vehicle started with the filer or spouse, since a used vehicle does not qualify, and whether final assembly of the vehicle occurred within the United States. A car that fails either test cannot generate a deduction no matter how much interest was paid on it. From there the math is untouched: line 30 (formerly line 24) caps the total at $10,000, lines 31 through 33 (formerly 25 through 27) subtract the MAGI threshold, line 34 (formerly 28) divides the excess by $1,000 and rounds up — the one part of the schedule that rounds against the taxpayer rather than in their favor — line 35 (formerly 29) multiplies by $200, and line 36 (formerly 30) is the deduction.

The enhanced deduction for seniors: same six percent, one-year-later birthday

Part V is the least disturbed section structurally, but it carries the draft’s one substantive numeric change. Both years start the same way: enter MAGI (line 37 in the draft, line 31 in 2025), subtract $75,000 ($150,000 MFJ), multiply the excess by 6%, and subtract that from a $6,000 base to get the phased-out amount (lines 38 through 41 in the draft; 32 through 35 in 2025). The difference sits in the next step. The 2025 form lets a filer claim that amount on line 36a only if they “were born before January 2, 1961,” with a matching test for a spouse on line 36b. The 2026 draft moves that cutoff to line 42a and 42b and changes the date to “born before January 2, 1962” — the birthdate that keeps the deduction available to anyone who turns 65 by the end of the 2026 tax year, exactly as the 2025 cutoff did for 2025. Line 43 (formerly 37) adds the two halves for the total.

Line-by-line comparison, by Part

Part	What it computes	2025 line	2026 draft line	What changed
I	MAGI	1–3	1–3	Nothing
II	Tips deduction	4–13	4–15	Single entries become 5-row employer/business tables with EIN and 1099 cross-checks; same caps and phase-out math, shifted two lines
III	Overtime deduction	14–21	16–27	Single entries become 5-row W-2 and 1099 tables; same caps and phase-out math, shifted six lines
IV	Car loan interest deduction	22–30	28–36	Adds Form 1098-VLI sourcing and two yes/no questions per VIN; same $10,000 cap and $100,000/$200,000 threshold
V	Senior deduction	31–37	37–43	Birth-date cutoff moves from before Jan. 2, 1961 to before Jan. 2, 1962; same $6,000 base and 6% phase-out
VI	Total	38, to Form 1040 line 13b (1040-NR line 13c)	44, to Form 1040, 1040-SR, or 1040-NR line 13a	Destination line changes; 2026 Form 1040 draft not yet posted to confirm what else occupies line 13a

Four examples, recalculated line by line

A single filer with $9,000 in employee tips. A waiter, filing single, has $9,000 of qualified tips coded “TP” in Form W-2 box 12 and a MAGI of $162,400. Line 8 (total tips) is $9,000; line 9 caps it at the smaller of $9,000 or $25,000, so line 9 is $9,000. Line 10 repeats MAGI, $162,400. Line 11 is the $150,000 single threshold. Line 12 subtracts: $162,400 − $150,000 = $12,400. Line 13 divides by $1,000 and rounds down: $12,400 ÷ $1,000 = 12.4, rounded down to 12. Line 14 multiplies by $100: 12 × $100 = $1,200. Line 15, the deduction, subtracts line 14 from line 9: $9,000 − $1,200 = $7,800.

A married couple filing jointly with $14,000 in overtime. Their combined MAGI is $310,500 and their W-2 box 12 code “TT” overtime totals $14,000. Line 20 (total overtime) is $14,000; line 21 caps it at the smaller of $14,000 or the MFJ limit of $25,000, so line 21 is $14,000. Line 22 is MAGI, $310,500. Line 23 is the $300,000 MFJ threshold. Line 24 subtracts: $310,500 − $300,000 = $10,500. Line 25 divides by $1,000 and rounds down: 10.5 rounds down to 10. Line 26 multiplies by $100: 10 × $100 = $1,000. Line 27, the deduction, is $14,000 − $1,000 = $13,000.

A single filer with $4,200 of interest on a new, US-assembled car. The filer’s MAGI is $103,050, and Form 1098-VLI box 1 reports $4,200 of qualified interest on a vehicle whose original use began with the filer and which was assembled in the United States — so both VIN questions on line 28 are answered yes. Line 29 (total qualified interest) is $4,200; line 30 caps it at the smaller of $4,200 or $10,000, so line 30 is $4,200. Line 31 is MAGI, $103,050. Line 32 is the $100,000 single threshold. Line 33 subtracts: $103,050 − $100,000 = $3,050. Line 34 divides by $1,000 and rounds up, the one asymmetric rounding rule in the schedule: $3,050 ÷ $1,000 = 3.05, rounded up to 4. Line 35 multiplies by $200: 4 × $200 = $800. Line 36, the deduction, is $4,200 − $800 = $3,400.

A married couple, both 65 or older, with MAGI of $160,000. Both spouses were born before January 2, 1962, so both qualify individually on lines 42a and 42b. Line 37 is MAGI, $160,000. Line 38 is the $150,000 MFJ threshold. Line 39 subtracts: $160,000 − $150,000 = $10,000. Line 40 multiplies by 6%: $10,000 × 0.06 = $600. Line 41 subtracts that from the $6,000 base: $6,000 − $600 = $5,400 — the amount available to each qualifying spouse. Line 42a is $5,400 and line 42b is $5,400. Line 43, the total, adds them: $5,400 + $5,400 = $10,800.

What is still open, and what to check before filing

Two things about this draft are unresolved on purpose, and a filer preparing early should not treat either as settled. First, the IRS has not yet posted a 2026 draft of Form 1040 itself, so there is no way to confirm what else will sit on line 13a once Schedule 1-A’s total moves there — on the 2025 form, line 13a is the qualified business income deduction from Form 8995 or Form 8995-A, and Schedule 1-A’s own total sits one line below it, on 13b. Second, the IRS’s own cover sheet on every draft form says that a new draft is posted whenever unexpected issues or legislation force a change, and that the last posted draft always matches the final revision — which means that until the final form appears, another draft is still possible. Filers who want to see what else is moving for 2026 and 2027 can track the broader set of inflation-indexed figures — none of which affect Schedule 1-A’s fixed dollar caps — in our IRS 2027 inflation adjustments tracker and our 2027 tax brackets and standard deduction projection, both of which move every year for reasons Schedule 1-A’s caps do not share, since Congress wrote those caps as flat dollar amounts rather than as inflation-indexed ones.

Anyone filling out a multi-employer tips or overtime table for the first time should keep every W-2 and 1099 on hand before starting, since each row of the 2026 draft asks for a specific employer identification number rather than a single combined figure. And a reader filing any tax return for the first time, tips schedule or not, will find the rest of the mechanics — what counts as a dependent, how withholding interacts with a refund, when a return is even required — in our guide to first-time tax filing.

Sources

• IRS, Schedule 1-A (Form 1040), 2026 draft — posted to IRS.gov/DraftForms September 4, 2026; “Created 6/16/26”
• IRS, Schedule 1-A (Form 1040), 2025 — final revision
• IRS, Form 1040, 2025 — final revision, “Created 9/5/25”
• IRS, Understanding your Form 1099-K — reporting threshold, verified September 13, 2026