10 — Adjustments to Income Updated for tax year 2025

What this line means

The total of your “above-the-line” deductions from Schedule 1, Part II. These adjustments reduce your total income to arrive at AGI, and you get them whether you itemize or take the standard deduction. Common adjustments include student loan interest, HSA contributions, self-employment tax deduction, IRA contributions, and educator expenses.

Does this apply to you?

• You contributed to a Health Savings Account (HSA)
• You paid student loan interest during the year
• You are self-employed and deducting half of your self-employment tax
• You made deductible contributions to a traditional IRA
• You are a teacher who spent money on classroom supplies (up to $300 educator expense deduction)

Easy to overlook

These deductions reduce AGI, which unlocks other benefits Above-the-line deductions are more valuable than they appear. Lowering your AGI can make you eligible for the Earned Income Credit, increase your Child Tax Credit, reduce your student loan interest phase-out, and lower your Medicare premiums two years later. An HSA contribution (up to $4,300 self-only or $8,550 family for 2025, plus $1,000 catch-up if 55+) does not just save you tax on the contribution — it can cascade into larger benefits downstream. ¹ [SOURCE: SOI data — underutilized above-the-line deductions]

New OBBBA deductions for tips, overtime, and car loan interest The One Big Beautiful Bill Act (effective for 2025) added three new above-the-line deductions: no tax on tips (up to $25,000 in qualifying tips), no tax on overtime pay (up to $12,500 single / $25,000 MFJ), and no tax on car loan interest (up to $10,000 for domestically assembled vehicles). These are claimed on Schedule 1 and reduce AGI directly. Workers earning tips and overtime should check eligibility — these new deductions can save thousands. ² [SOURCE: OBBBA — One Big Beautiful Bill Act, tax deductions for working Americans]

Self-employed health insurance deduction If you are self-employed and pay for your own health insurance, you can deduct 100% of the premiums as an above-the-line adjustment — not just as an itemized deduction on Schedule A. This is one of the most valuable deductions for freelancers and small business owners, and it is frequently overlooked because people assume health insurance is only deductible if they itemize. ³ [SOURCE: IRS Schedule 1 Part II instructions]

Watch out for this

Not claiming adjustments because you take the standard deduction. Above-the-line deductions on Schedule 1 are completely separate from the standard deduction vs. itemized deduction choice on line 12e. You get both. Taking the standard deduction does not mean you lose HSA, student loan, or IRA deductions — those reduce your income before the standard deduction is even applied.

Related lines on your return

• Schedule 1, Part II — Form 1040 — Detailed list of all above-the-line adjustments
• Line 9 — Form 1040 — Total income; line 10 is subtracted from this
• Line 11a — Form 1040 — Adjusted gross income; the result of line 9 minus line 10