What Is Schedule 1 (Form 1040) Line 26?

When preparing a federal income tax return, most individuals focus on Form 1040. Many taxpayers also interact with Schedule 1 (Form 1040), a supplemental form. This schedule reports specific types of income not directly on Form 1040, as well as crucial “adjustments to income.” Line 26 on Schedule 1 is particularly significant, as it aggregates these adjustments, often called “above-the-line” deductions, which directly reduce a taxpayer’s gross income.

The Role of Schedule 1

Schedule 1, “Additional Income and Adjustments to Income,” connects various financial activities to the core tax calculation on Form 1040. Its primary function is to report income sources beyond typical wages, salaries, interest, and dividends, such as business income, rental income, or unemployment compensation. Schedule 1 also plays a significant role in allowing taxpayers to claim various adjustments to income. These adjustments are specific deductions that reduce a taxpayer’s total income before calculating their Adjusted Gross Income (AGI).

These adjustments are valuable because they lower a taxpayer’s gross income to arrive at AGI, a foundational figure in the tax system. Unlike itemized deductions, which require taxpayers to forgo the standard deduction, these adjustments are available to all eligible taxpayers, regardless of whether they itemize or take the standard deduction. The total adjustments from Line 26 of Schedule 1 are transferred to the main Form 1040, directly impacting AGI calculation.

Specific Deductions on Line 26

Line 26 of Schedule 1 consolidates several common “above-the-line” deductions, each with specific eligibility requirements and limitations. These deductions directly reduce your gross income, lowering your Adjusted Gross Income (AGI).

Educator Expenses

This deduction is available to eligible educators who incur unreimbursed classroom costs. An eligible educator is a kindergarten through 12th-grade teacher, instructor, counselor, principal, or aide who works at least 900 hours during a school year in a school providing elementary or secondary education. For 2024 and 2025, eligible educators can deduct up to $300 of qualified unreimbursed expenses. If two eligible educators are married and file jointly, they can deduct up to $600, with a maximum of $300 per person. Qualified expenses include books, supplies, computer equipment, other equipment, and supplementary materials used in the classroom.

Health Savings Account (HSA) Deduction

Individuals covered by a high-deductible health plan (HDHP) can deduct contributions made to an HSA. To qualify, an individual must be covered under an HDHP, have no other health coverage (with some exceptions), not be enrolled in Medicare, and not be claimed as a dependent on someone else’s tax return. For 2024, the maximum contribution is $4,150 for self-only coverage and $8,300 for family coverage. For 2025, these limits increase to $4,300 for self-only coverage and $8,550 for family coverage. Individuals aged 55 or older can contribute an additional $1,000 as a catch-up contribution.

Self-Employment Tax Deduction

Self-employed individuals pay Social Security and Medicare taxes. They are responsible for both the employer and employee portions of these taxes, totaling 15.3% of their net earnings from self-employment. Self-employed individuals can deduct one-half of their self-employment tax as an adjustment to income.

Traditional Individual Retirement Arrangement (IRA)

Contributions to a Traditional IRA may be deductible. For 2024 and 2025, the maximum contribution limit is $7,000, with an additional catch-up contribution of $1,000 for those age 50 or older, totaling $8,000. The deductibility of Traditional IRA contributions can be limited if the taxpayer, or their spouse, is covered by a retirement plan at work and their income exceeds certain levels. However, if neither the taxpayer nor their spouse is covered by a workplace retirement plan, the deduction is generally allowed in full.

Student Loan Interest Deduction

Taxpayers can deduct interest paid on qualified student loans, up to $2,500. This deduction is subject to income limitations and a phase-out for higher earners. For 2024, the deduction begins to phase out for single filers with a Modified Adjusted Gross Income (MAGI) between $80,000 and $95,000, and for joint filers with a MAGI between $165,000 and $195,000. For 2025, the phase-out range for single filers is between $85,000 and $100,000, and for joint filers, it is between $170,000 and $200,000.

Alimony Paid

Alimony Paid is deductible for divorce or separation agreements executed before 2019. Under the Tax Cuts and Jobs Act (TCJA), alimony payments for agreements executed after December 31, 2018, are generally not deductible by the payer and are not considered income for the recipient. If the agreement was in place before 2019, the payer can deduct the alimony payments on Schedule 1.

How Line 26 Impacts Your Taxes

The deductions reported on Line 26 of Schedule 1 are significant because they reduce a taxpayer’s Adjusted Gross Income (AGI). AGI is a foundational figure in tax calculations, serving as the starting point for determining taxable income. A lower AGI can lead to a reduced tax liability.

AGI is a critical factor in determining eligibility for various tax credits and other deductions. Many tax benefits, such as certain tax credits or the ability to deduct specific itemized expenses, are subject to AGI limitations. For instance, the deductibility of medical expenses or charitable contributions can be affected by AGI thresholds. A lower AGI can increase the likelihood of qualifying for these benefits.