IRS Released Schedule 1-A for OBBBA Deductions. Here's What CPAs Need to Know.

The IRS just released Schedule 1-A — the actual form your clients need to claim the OBBBA's four signature deductions. Tips, overtime, car loan interest, and the enhanced senior deduction all land on this one-page form. If you've got W-2 clients or self-employed folks who might qualify, here's what you need to know right now.

What Schedule 1-A Does

It's a single form that calculates all four deductions from the One Big Beautiful Bill Act. Your clients add up the deductions that apply, dump the total on line 13b of Form 1040, and call it a day.

The form itself matches the draft version from last year, but the updated Form 1040 instructions spell out exactly how each deduction works. That's where the real details live.

The Tips Deduction (and the SSTB Problem)

Your clients can deduct qualified tips — but not if they work for an SSTB (Specified Service Trade or Business). Think consultants, lawyers, financial advisors. If your client slings coffee at a law firm, their tips don't qualify. If they sling coffee at a regular café, they do.

The catch: until the IRS issues final regulations, they're using transition relief. If your client worked in an occupation that customarily and regularly received tips before December 31, 2024, they're in. That covers waiters, bartenders, hairdressers, valets — the usual suspects.

The Overtime Deduction (FLSA Premium Only)

Here's where it gets specific: your client can only deduct the FLSA overtime premium, not the full overtime wage. If they make $20/hour regular and $30/hour for overtime, they deduct $10/hour (the premium), not the full $30.

The Car Loan Interest Deduction (New Vehicles Only)

This one's narrow. Your client's car must be an applicable passenger vehicle (APV): original use starts with them, manufactured for public roads, at least two wheels, under 14,000 pounds GVW, and final assembly in the U.S.

If your client bought a used Honda, financed a Tesla assembled in Shanghai, or drives a semi, they're out. If they bought a new Ford F-150 assembled in Dearborn, they're in.

The Enhanced Senior Deduction (Age 65 Rule)

If your client was born before January 2, 1961, and is still alive, they qualify for the enhanced standard deduction. The twist: exact date of death matters for deceased taxpayers born in early 1960.

All Four Deductions Expire After 2028

This isn't permanent tax law. All four deductions sunset after the 2028 tax year unless Congress extends them. That means three more filing seasons before they're gone.

What This Means for CPAs

If you've got clients in tipped industries, public sector overtime workers, or anyone who bought a new American-made car in the last year, Schedule 1-A matters this filing season. The form's out, the instructions are live, and your clients who qualify can claim these deductions right now.