Schedule 1-A Part II deducts qualified tips and Part III deducts qualified overtime. On $40,000 of code TP and $30,000 of code TT, single, at $80,000 of MAGI, the deductions are $25,000 and $12,500. The tips cap does not double on a joint return.
Tips + overtime
$37,500.00
Parts II and III total $37,500.00. Tips $25,000.00. Overtime $12,500.00.
How the total splits
Line 4c assumes one employer and uses the larger of line 4a and line 4b. Lines 4b, 5, and 14b are zero because this page does not estimate Form 4137 or a 1099. The tips cap is $25,000 on every return, including a joint return. The overtime cap is $12,500, or $25,000 if you file jointly. Parts IV and V, car loan interest and the senior deduction, are not computed, so this total is not Schedule 1-A line 38. Tax saved uses 2026 brackets and stacks both deductions. After 2025, the overtime deduction cannot exceed code TT on Form W-2 or a corrected W-2c.
| Line 4a, W-2 qualified tips | $40,000.00 |
|---|---|
| Line 4b, Form 4137 | $0.00 |
| Line 4c, employee tips used | $40,000.00 |
| Line 5, 1099 tips | $0.00 |
| Line 6, tips before the cap | $40,000.00 |
| Line 7, after the tips cap | $25,000.00 |
| Line 8, modified AGI | $80,000.00 |
| Line 9, phase-out threshold | $150,000.00 |
| Line 10, MAGI over the threshold | $0.00 |
| Line 11, full thousands | 0 |
| Line 12, phase-out reduction | $0.00 |
| Line 13, tips deduction | $25,000.00 |
| Line 14a, W-2 qualified overtime | $30,000.00 |
| Line 14b, 1099 overtime | $0.00 |
| Line 14c, overtime before the cap | $30,000.00 |
| Line 15, after the overtime cap | $12,500.00 |
| Line 16, modified AGI | $80,000.00 |
| Line 17, phase-out threshold | $150,000.00 |
| Line 18, MAGI over the threshold | $0.00 |
| Line 19, full thousands | 0 |
| Line 20, phase-out reduction | $0.00 |
| Line 21, overtime deduction | $12,500.00 |
| Parts II and III | $37,500.00 |
| Federal income tax saved | $5,850.00 |
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Line 13 is code TP after the $25,000 cap and the phase-out. Line 21 is code TT after the $12,500 cap, or $25,000 joint. Lines 4b, 5, and 14b stay at zero here.
Part II is qualified tips. Part III is qualified overtime. You type modified AGI, which is Schedule 1-A line 3, plus the qualified amounts. For a 2026 Form W-2 those amounts are box 12 code TP and code TT. Code TT is the FLSA premium above the regular rate, not the whole overtime check. The deduction on line 21 cannot exceed that code after 2025. FS-2026-13 uses a $30,000 code TT and still applies the cap. Notice 2025-69 was the 2025 transition, when the W-2 did not have to show the premium.
The tips cap is $25,000 on every return, including married filing jointly. The overtime cap is $12,500, or $25,000 on a joint return. Both phase out by $100 for each full $1,000 of MAGI over $150,000, or over $300,000 if you file jointly. Married filing separately cannot claim either deduction. Line 4c assumes one employer. This page does not estimate Form 4137 or a 1099, so lines 4b, 5, and 14b stay zero.
Part IV is qualified vehicle loan interest and Part V is the enhanced deduction for seniors. The IRS fact sheet and the Form 1040 instructions cover those parts. This page does not compute them, and the total above is not line 38. Line 38 also adds Parts IV and V, then moves to Form 1040 line 13b. A Social Security number valid for employment is required. This page does not check that.
| Line 13, tips | $25,000.00 |
|---|---|
| Line 21, overtime | $12,500.00 |
| Parts II and III | $37,500.00 |
| Line 12, reduction | $1,000.00 |
|---|---|
| Line 13, tips | $24,000.00 |
| Line 21, overtime | $9,000.00 |
| Line 7, tips cap | $25,000.00 |
|---|---|
| Line 15, overtime cap | $25,000.00 |
| Parts II and III | $50,000.00 |
It is the 2025 Form 1040 schedule for four deductions: qualified tips, qualified overtime, qualified vehicle loan interest, and the enhanced deduction for seniors. You can claim them whether or not you itemize. The total on line 38 goes to Form 1040 line 13b. This page fills in Part II and Part III only.
No. Line 7 is the smaller of your qualified tips and $25,000 on every return, including married filing jointly. The overtime cap is the one that rises, from $12,500 to $25,000, when you file jointly. A married person who files separately cannot claim either deduction.
Code TT is the qualified overtime premium. It is the starting point for line 14a. Code TP is cash tips reported to the employer. The qualified portion is the starting point for line 4a. For tax years after 2025, the overtime deduction cannot exceed code TT on Form W-2 or a corrected Form W-2c. A pay stub does not raise that amount.
No. Part IV is qualified vehicle loan interest and Part V is the enhanced deduction for seniors. The IRS fact sheet FS-2026-04 and the Form 1040 instructions explain those parts. They are not added into the total on this page, so the figure is not line 38.