New IRS Forms for 2025–2026 Under the One Big Beautiful Bill Act: What Taxpayers Need to KnowNew IRS Forms for 2025–2026 Under the One Big Beautiful Bill Act: What Taxpayers Need to Know
Following the enactment of the One Big Beautiful Bill Act (OB-BBA), the IRS has begun releasing new and updated tax forms for the 2025 and 2026 tax years. These changes are not just administrative—they directly affect how deductions are calculated, how income is reported, and how taxpayers substantiate new benefits created by the law.
For creators, online sellers, medical professionals, and high net worth individuals, understanding these form changes is essential to claiming deductions correctly and avoiding filing errors.
At Velin & Associates, Inc., we are already preparing clients for these updates so there are no surprises when filing season arrives.
Below is a breakdown of the most important new and updated forms—and what they mean in practice.
New Schedule 1A (2025): Additional Non-Itemized Deductions
One of the most significant changes is the introduction of New Schedule 1A, first released as a draft in September 2025.
Schedule 1A is used to calculate four new below-the-line, non-itemized deductions created by OB-BBA:
- Qualified tips deduction
- Qualified overtime deduction
- Car loan interest deduction
- Enhanced deduction for seniors
This schedule also calculates modified adjusted gross income (MAGI) for each deduction, which determines eligibility and phaseouts. Once calculated, the total deduction flows directly to Form 1040.
Why this matters
Taxpayers no longer need to itemize to benefit from these deductions—but the calculations are precise, and errors can disqualify otherwise eligible taxpayers.
Example (Creator):
A TikTok creator earns income from brand partnerships and also works part-time in a tipped role. Even though they take the standard deduction, Schedule 1A allows them to claim a qualified tips deduction—reducing taxable income without itemizing. This is especially relevant for CPA for TikTokers and CPA for Creators clients.
W-2 Changes for 2026: New Boxes for Tip Reporting
The 2026 draft Form W-2 introduces an important structural change:
- Box 14A – Other information (similar to old Box 14)
- Box 14B – Used to report qualifying tips and tipped occupation codes
Employees must use the tipped occupation code to claim the qualified tips deduction.
Transition relief for 2025
For 2025, employers will not be penalized for failing to separately report tips, overtime, or occupation codes. This gives businesses time to update payroll systems.
Example (Hospitality & creators):
A YouTuber who supplements income with hospitality work receives tips in 2025 and 2026. In 2026, the tipped occupation code on the W-2 becomes essential to properly claim the deduction. Without it, the IRS may disallow the benefit.
Updated 1099 Forms for 2026: Tips and Overtime Reporting
The IRS has released draft 2026 Forms 1099-NEC, 1099-MISC, and 1099-K, each updated to include:
- Lines for cash tips
- Treasury tipped occupation codes
- Overtime compensation (for 1099-NEC and 1099-MISC)
Why this matters
Independent contractors, freelancers, and gig workers will see more detailed income reporting—and mismatches can trigger IRS notices if not handled correctly.
Example (Online commerce):
An Amazon Business owner pays independent contractors who receive tips for live product demonstrations. In 2026, those tips may appear on Form 1099-K or 1099-NEC, impacting deductions and reporting. This is a common planning issue for CPA for Amazon Business and CPA for Online Commerce clients.
Form 4547: Trump Account Elections (Starting 2025)
New Form 4547 allows taxpayers to:
- Elect to open a Trump Account (a new type of traditional IRA for children)
- Elect to receive the $1,000 federal pilot contribution for children born between 2025–2028
The form is simple and will be filed with the 2025 tax return.
Example (High net worth family):
A high-income medical professional with a child born in 2026 elects to open a Trump Account and receive the pilot contribution. While contributions are limited, this creates an early tax-advantaged savings vehicle. This strategy is often relevant for CPA for High Net Worth Individuals and CPA for Doctors.
New Form 1098-VLI: Vehicle Loan Interest Reporting
OB-BBA created a new deduction for qualified vehicle loan interest, and lenders now have a new reporting requirement:
- Form 1098-VLI (Vehicle Loan Interest Statement)
- Issued when a taxpayer pays $600 or more in qualifying vehicle loan interest
Transition relief for 2025
For 2025, lenders may provide a supplemental statement instead of issuing Form 1098-VLI. Taxpayers may rely on this statement to claim the deduction.
Example (Business owner):
A dental practice owner finances a vehicle used primarily for business operations. Even without receiving Form 1098-VLI in 2025, lender statements may still support the car loan interest deduction. This is especially relevant for CPA for Dental Practice and Dentist CPA clients.
Why These Changes Require Advance Planning
The 2025–2026 tax years represent a major reporting transition:
- New deductions without itemizing
- New codes required to substantiate benefits
- Expanded information reporting on W-2s and 1099s
- New elections that must be made correctly and on time
Missing documentation or misunderstanding form changes can easily result in lost deductions or IRS correspondence.
How Velin & Associates, Inc. Helps
We assist clients by:
- Interpreting new IRS forms and draft guidance
- Ensuring income and deductions align across W-2s, 1099s, and Schedule 1A
- Planning for new deductions related to tips, overtime, vehicle loans, and seniors
- Advising families on Trump Account elections
- Coordinating payroll and contractor reporting to reduce audit risk
These updates affect YouTubers, Shopify sellers, Amazon businesses, creators, doctors, dentists, and high net worth individuals—often in very different ways.
For more information about our tax planning services, contact us today: visit our website.
Velin & Associates, Inc
8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org
CPA for YouTubers | CPA for Shopify Store | CPA for Online Commerce | CPA for Creators | Shopify Store CPA | CPA for Filmmakers | CPA for Amazon Business | Amazon Business CPA | CPA for Dental Practice | Dentist CPA | Dental Business CPA | Online Commerce CPA | CPA for TikTokers | CPA for Doctors | CPA for Medical Practice | CPA for High Net Worth Individuals
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.