Key Takeaways
- Beyond the well-known Standard Deduction, many taxpayers are unaware of numerous other deductions that could lower their tax bills. The importance of being informed about these opportunities to maximize tax savings can’t be overemphasized.
- Taxpayers can take advantage of deductions for various everyday expenses, such as student loan interest, IRA contributions, self-employed retirement plans, and health-related costs like insurance premiums and out-of-pocket medical expenses.
- Self-employed people have access to a range of deductions designed for them, including write-offs for health insurance premiums, home offices, business expenses, qualified business income, and a portion of their self-employment tax.
- Many deductions, such as those for medical and dental expenses, state and local taxes, mortgage interest, and gifts to charity, require taxpayers to itemize their deductions. However, itemizing is beneficial only if the total of all your itemized deductions exceeds the Standard Deduction available for your filing status.
What can you write off on your taxes as a deduction?
Everyone’s looking for easy write-offs that can cut their tax bill. Fortunately, there are several tax deductions for everyday expenses that can do just that…if you know about them.
The trouble with many deductions is that people often aren’t aware of their existence. Most people know about the Standard Deduction, but widespread familiarity with certain other common tax deductions is a bit more iffy.
So, to help you take advantage of all the write-offs you’re entitled to claim, here are 20 tax deduction examples that are available to millions of Americans. Check them out to see if you qualify when you’re filing your next federal income tax return.
1. State income or sales tax deduction
You have the option of deducting either state income taxes or sales taxes on your federal return.
For most people, you’ll save more by deducting your state income tax. However, if you live in a state with no income tax, you’ll want to go with the sales tax deduction. Or, if you made a big purchase during the tax year (e.g., you bought a wedding ring or a car), the sales tax write-off might be a better deal, even if you also paid state income taxes for the year.
There are a couple of catches, though. First, you have to itemize to deduct state sales or income taxes, which means you can’t also take the Standard Deduction. Second, for the 2018 to 2025 tax years, your deduction for all state and local taxes is capped at $10,000 ($5,000 if you’re Married Filing Separately).
2. Property tax deduction
You can also deduct your property taxes. This includes both real estate taxes and personal property taxes.
However, as noted above, you have to itemize and all state and local taxes – including property taxes – are combined and then capped at $10,000 ($5,000 if you select the Married Filing Separately filing status).
TurboTax Tip:
If you pay next year’s property taxes this year (e.g., in December), you might be able to deduct them on your tax return for the current tax year. The key is that the taxes must actually be “assessed” and paid in the current year. State or local law dictates when a property tax is assessed, which is generally when you become liable for the tax imposed.
3. Student loan interest deduction
Student loan payments can be a huge drag on your finances for years. But did you know you might be able to deduct up to $2,500 of the interest you pay on those loans?
The student loan interest deduction is only available to the person who is legally responsible for paying the student loan. So, if a parent or someone else pays your student loan for you, you can still claim the deduction if you’re the one who’s legally obligated to pay off the loan.
If you make too much money, your deduction will be phased-out. And you can’t claim the deduction if you’re married and file a separate tax return from your spouse. But at least you don’t have to itemize to deduct your student loan interest.
4. Home mortgage interest deduction
If you’re a homeowner, you likely have a monthly mortgage payment weighing you down. But at least you might be able to deduct the interest paid on the loan.
There are some restrictions, though. First, you have to itemize to claim the mortgage interest deduction.
You also can only deduct mortgage interest to the extent the loan is used to buy, build, or substantially improve the home securing the loan.
There are also limits on the loan amount, depending on when the mortgage is taken out. Generally, you can only deduct home mortgage interest on up to:
- $750,000 of a mortgage taken out after December 15, 2017 ($375,000 if you’re Married Filing Separately)
- $1,000,000 of a mortgage taken out on or before December 15, 2017 ($500,000 if you’re Married Filing Separately)
Mortgage points are generally deductible, too.
5. IRA deduction
Even if you’re decades away from your golden years, it’s never too early to start saving for retirement. And if you’re middle-age or older…well, you don’t have much time left to save.
But the good news is that the tax code provides some help in the form of a tax deduction for contributions to a “traditional” individual retirement account (IRA). And you don’t have to itemize to claim this deduction.
For the 2024 tax year, the maximum IRA deduction is $7,000 for most people (up from $6,500 for 2023). But if you’re at least 50 years old, you can deduct an additional $1,000 of “catch-up” contributions to an IRA – for a maximum of $8,000 (up from $7,500 for 2023).
If you or your spouse is covered by a retirement plan at work, your IRA deduction might be gradually phased out (potentially to $0). You also can’t claim the deduction for contributions to a Roth IRA.
6. Self-employed SEP, SIMPLE, and qualified plans deduction
Self-employed people need to save for retirement, too. And there are special retirement plans designed just for them (and other small business owners), such as:
- Simplified Employee Pension (SEP) IRAs
- Savings Incentive Match Plan for Employees (SIMPLE) IRAs
- Solo 401(k) plans
The good news: Self-employed people can generally deduct contributions to these plans, up to each plan’s contribution limit.
7. Medical and dental expense deduction
This is actually a deduction you usually don’t want to take, because if you’re eligible for the write-off it typically means you have a serious health problem. But if you’re ill, involved in a major car accident, or have some other condition or reason for getting large medical bills, you might be able to offset some of those costs with the medical expense deduction. (Dental bills are deductible, too.)
However, there are two important limitations on the deduction:
- You must itemize to claim the deduction (so you can’t claim the Standard Deduction).
- It’s only available for medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI).
For example, assume you itemize, have $10,000 of eligible medical expenses, and have $100,000 of AGI. In that case, 7.5% of your AGI is $7,500 ($100,000 x .075 = $7,500). So, you can only deduct $2,500 of your medical costs, which is the amount that’s greater than $7,500 ($10,000 - $7,500 = $2,500).
8. Health insurance premiums deduction
And speaking of medical expenses, the best way to cover them is with health insurance. But if you have to cover the cost of health insurance by yourself, your premium payments can quickly blow up your budget.
Medical and dental insurance premiums that you pay yourself (e.g., not paid through payroll deductions) are generally eligible for the medical expense deduction. But you usually can’t deduct them because of the 7.5%-of-AGI limit (see above).
However, if you’re self-employed and responsible for your own coverage, you might be able to deduct 100% of your health insurance premium costs without having to worry about the 7.5% restriction. You don’t have to itemize to claim the deduction for self-employed health insurance costs, either.
Plus, the deduction covers the cost of insuring your spouse and dependents, too.
9. HSA deduction
One way to cover your healthcare expenses is through a health savings account (HSA). These are tax-advantaged accounts used to save for future medical costs.
You can only put money in an HSA if you’re covered under a high-deductible health plan (HDHP). But if that’s the case, you can deduct contributions to your HSA, up to the annual contribution limit.
For 2024, the HSA contribution limits are:
- $4,150 if you have self-only coverage under an HDHP ($4,300 for 2025)
- $8,300 if you have family coverage under an HDHP ($8,550 for 2025)
If you’re at least 55 years old, you can contribute (and deduct) an additional $1,000 each year.
10. Alimony deduction
If you’ve been divorced or separated for a while, you might be able to deduct alimony paid to your former spouse. It’s not an itemized deduction, so you can also claim the Standard Deduction on the same tax return.
The alimony must be paid according to a divorce or separation agreement from before 2019. However, the agreement can’t be modified later to provide that the alimony you pay isn’t included in your former spouse's taxable income.
You’ll also have to give the IRS your former spouse’s Social Security number, so the IRS can check to make sure he or she is reporting the alimony as income.
11. Moving expenses deduction (military personnel only)
If you’re in the military, thank you for your service. And if you have unreimbursed expenses from PCSing (that’s making a “permanent change of station” for you civilians), you might be able to deduct your moving costs on your tax return if you’re on active duty (you don’t have to itemize to claim this deduction).
You must be on active duty and your move must be due to a military order. This can include moving from your home to your first post, moving from one permanent post to another, and moving from your last post to your home.
If you drive your own car from one post to another in 2023, you can deduct either:
- your actual expenses for gas, oil, and the like
- 22¢ per mile (21¢ per mile for moves in 2024)
Parking fees and tolls are also deductible…again, as long as they’re not reimbursed.
The moving expense deduction for non-military taxpayers was suspended for the 2018 to 2025 tax years.
12. Educator expense deduction
Many teachers dip into their own pocket to buy supplies needed for the classroom. While it may sometimes seem like nobody appreciates that dedication, the IRS does.
With the educator expense deduction, qualified K-12 educators can deduct up to $300 for materials purchased in 2024. The maximum deduction is adjusted for inflation each year (although it was $300 in 2023, too).
You can also take advantage of this deduction even if you don’t itemize.
13. Gambling loss deduction
Did you have a weekend in Las Vegas that didn’t go so well? Or perhaps you had a string of bad luck at the track. If you’re a gambler, you might be able to deduct the cost of your bad bets (including the cost of non-winning bingo, lottery, and raffle tickets).
However, you can only deduct gambling losses to the extent you report gambling winnings as taxable income on your return. So, for example, if you won $1,000 during the year but bet a total of $5,000, you can only deduct $1,000 in losses.
You also have to itemize to deduct gambling losses.
14. Charitable gift deduction
Did you know you can deduct money or goods given to charities, churches, schools, other tax-exempt organizations? You have to itemize to claim the charitable gift deduction, and there are certain income-based restrictions (e.g., cash contributions can’t be more than 60% of your AGI), but it’s a great tax break for charitably-minded people.
If you do volunteer work for a charity, your unreimbursed out-of-pocket expenses are also deductible if they’re:
- directly connected with your volunteer services
- incurred only because of your volunteer services
- not personal, living, or family expenses
For example, if you make cupcakes for a charity fundraiser, you can deduct the cost of the ingredients you used to bake them.
If you drive your own car as a volunteer, you can deduct related expenses, too. You can either deduct:
- your actual expenses for gas, oil, and the like
- 14¢ per mile (i.e., the standard mileage rate)
You can also deduct tolls and parking expenses.
15. Casualty and theft loss deduction
Another itemized deduction is available for the value of personal property lost or stolen during a natural disaster, such as a hurricane, flood, earthquake, and the like. For the 2018 to 2025 tax years, the loss must be tied to a federally declared disaster.
The deduction amount is limited, too. You can only deduct a disaster loss to the extent that both:
- The amount of each separate loss is more than $100.
- The total amount of all losses during the year (reduced by the $100 limit) is more than 10% of your AGI.
16. Jury duty pay deduction
If you receive payment for serving on a jury, you have to pay tax on that money. Plus, if you miss work because you’re called for jury duty, your employer still might pay your regular salary…which is also taxed.
However, if you’re required to hand over your jury duty pay to your employer because you still received your regular wages for the time you missed at work, you can deduct the jury pay on your tax return. And you don’t have to itemize to take this deduction.
17. Home office deduction
It wasn’t very common before the pandemic, but lots of people work from home now. However, for the 2018 to 2025 tax years, remote employees can’t deduct expenses related to their home office – but self-employed people can.
You can only deduct home office expenses if part of your home is "regularly and exclusively" used as your principal place of business. If so, you can deduct the costs for insurance, utilities, rent, mortgage interest, property taxes, repairs, maintenance, and more for that part of your home.
Self-employed people can calculate the home office deduction in one of two ways. You can either deduct:
- the actual expenses related to your home office (i.e., your total home expenses multiplied by a percentage representing the portion of your home used for business)
- $5 for every square foot of your home office (up to 300 sq. ft.)
The deduction is claimed as a business expense on Schedule C (Form 1040), so you don’t have to itemize to take advantage of this write-off.
18. Business deductions for the self-employed
Self-employed people also get to deduct their business expenses that are both ordinary and necessary. An expense is “ordinary” if it’s common and accepted in your field of business, while a “necessary” expense is one that’s helpful and appropriate for your business. Examples of common business expenses include costs for:
- advertising
- cars and trucks
- commissions and fees
- depreciation
- employee benefit programs
- insurance
- interest
- mortgages
- legal and professional services
- office space
- rent
- repairs and maintenance
- supplies
- taxes and licenses
- travel
- utilities
- wages
The cost of goods sold are also deductible.
As with the home office deduction, business expenses are reported on Schedule C – so you don’t have to itemize to claim them.
The business expense deduction for employees was suspended for the 2018 to 2025 tax years. When allowed, it’s a miscellaneous itemized deduction that’s only deductible to the extent that all miscellaneous deductions exceed 2% of your AGI.
19. Qualified business income deduction
There’s another valuable deduction available to certain self-employed people for the 2018 to 2025 tax years – the qualified business income deduction (sometimes called the “Section 199A deduction” after the tax code section authorizing it). If you qualify, the deduction is worth up to 20% of your “qualified business income,” which is generally the net combined total of income, gain, deduction, and loss from any qualified trade or business.
However, the deduction is gradually phased-out (possibly to $0) for certain service-oriented business owners (e.g., lawyers, doctors, accountants, financial planners, and more) if their business income exceeds a certain amount. For 2024, the phase-out begins when taxable income before the deduction is greater than:
- $383,900 for joint filers ($364,200 for 2023)
- $191,950 for everyone else ($182,100 for 2023)
You don’t have to itemize to claim this deduction. But unlike the other non-itemized deductions, this deduction is reported after the line for AGI on your tax return and, therefore, won’t lower your AGI.
20. Self-employment tax deduction
The bad news about being self-employed: You have to pay 15.3% of your income for social security and medicare taxes. This extra burden – known as the self-employment tax – is equal to the combined amount ordinarily paid by both employees and employers.
But there's one small consolation – you can deduct 50% of the self-employment tax (i.e., the 7.65% employer portion) from your taxable income. And the deduction applies whether or not you take the Standard Deduction or itemize.
FAQs about tax deductions
The tax deduction examples above will help you save money if you’re eligible to claim them. But people still often have general questions about tax deductions. For example, how do they compare to other tax breaks? What documentation is needed to claim a tax deduction? Can deductions help you save money in other ways?
Here are answers to some frequently asked questions about tax deductions. Hopefully, they’ll help you understand these tax breaks a little better.
What’s the difference between a tax deduction and a tax credit?
Both tax deductions and tax credits provide tax relief, but their methods and impacts differ considerably.
Tax deductions lower your taxable income. In other words, they reduce the base amount from which your taxes are calculated. The value of a tax deduction depends on the tax bracket you’re in. For example, if you qualify for a $500 tax deduction and are in the 22% bracket, the deduction results in $110 of tax savings ($500 x .22 = $110).
Tax credits, on the other hand, reduce the taxes you owe on a dollar-for-dollar basis. So, if you qualify for a $1,000 tax credit, it generally means you can subtract the full $1,000 from your tax bill. This actually makes tax credits more valuable than tax deductions.
However, it's important to note that there are two distinct types of credits: refundable and nonrefundable tax credits. Refundable tax credits can provide a tax refund if the value of the credit is greater than your total tax liability. Nonrefundable tax credits can reduce your tax liability to zero, but they won’t generate a refund if the credit exceeds the amount owed. So, obviously, refundable credits are better than nonrefundable credits.
What’s the difference between a tax deduction and a tax exclusion?
Both tax deductions and tax exclusions reduce the amount of income that’s taxed, but there’s an important difference.
With a tax deduction, you subtract the write-off from income that’s reported on your tax return. However, with a tax exclusion, you don’t even need to report excluded income on your tax return in the first place. For example, payouts from a life insurance policy aren't included in gross income and don't have to be reported on your return.
What deductions can I claim without receipts?
As a general practice, you want to keep any receipts related to a tax deduction (or other tax break) you plan to take. That way, if the IRS challenges a deduction, you have the documentation needed to back up your claim.
However, a handful of the tax deductions don’t necessarily require receipts. The Standard Deduction is one of them. It’s a set amount that’s mostly based on your filing status.
The home office deduction is another. If you simply claim $5 for every square foot of your home office, you don’t need to keep receipts for insurance, rent, utilities, repair cost, or any of the other actual expenses for your workspace.
Likewise, if you’re deducting expenses related to the use of your car or truck, you can use the standard mileage rate without having to keep receipts for gas, oil, repairs, and other actual costs to drive and maintain your vehicle. In addition to the standard mileage rates listed above for volunteer service and military moving expenses in 2024, you can claim:
- 67¢ per mile for the business use of your vehicle (65.5¢ per mile for 2023)
- 21¢ per mile for medical-related travel (22¢ per mile for 2023)
The IRS also provides tables you can use to calculate the sales tax deduction if you don’t have receipts for all your purchases during the year.
In some cases, you’ll get a tax form or other notification from a third party providing the information you need to claim a tax deduction without keeping any receipts yourself. You’ll see this with deductions for IRA and HSA contributions, mortgage and student loan interest, and property taxes.
You might have other documentation that can be used in lieu of receipts. For instance, a divorce decree showing the amount of alimony you must pay each month.
No receipt is required for the self-employment tax deduction, either. You just need to calculate 50% of your self-employment tax.
What’s the difference between an itemized deduction and other tax deductions?
There are two main differences between itemized deductions and other tax deductions. First, itemized deductions, which are reported on Schedule A (Form 1040), can’t be taken if you claim the Standard Deduction. All the other deductions can be taken along with the Standard Deduction.
Second, itemized deductions are subtracted from income on your tax return after your AGI is calculated. As a result, they don’t reduce your AGI. On the other hand, the other deductions – except the qualified business income deduction – are subtracted from income before calculating your AGI. So, they actually lower your AGI. (These are known as “above-the-line” deductions since they’re reported on your tax return above the line for your AGI.)
This is important because a lower AGI can help you qualify for or increase the amount of certain other tax breaks. Reducing your AGI can also have non-tax benefits. For example, seniors with a higher AGI pay more for Medicare Part B and Medicare prescription drug coverage.
How much is the Standard Deduction?
The basic Standard Deduction depends on your filing status. For 2024, the basic Standard Deduction amounts are:
- $14,600 for Single filers and those filing Married Filing Separately returns ($13,850 for 2023)
- $21,900 for Head of Household filers ($20,800 for 2023)
- $29,200 for those filing Married Filing Jointly or Qualifying Surviving Spouse ($27,700 for 2023)
For dependents, the Standard Deduction is generally limited to the greater of:
- $1,300 ($1,250 for 2023)
- earned income plus $450 ($400 for 2023)
An additional Standard Deduction is available to people who are at least 65 years old or blind. For 2024, the additional amounts are:
- $1,550 for Married Filing Jointly, Married Filing Separately, and Qualifying Surviving Spouse filers ($1,500 for 2023)
- $1,950 for Single and Head of Household filers ($1,850 for 2023)
The Standard Deduction was nearly doubled for the 2018 to 2025 tax years. It’s scheduled to go back down to pre-2018 levels (as adjusted for inflation) starting in 2026.
Should I itemize or claim the Standard Deduction?
You can either claim the Standard Deduction or itemized deductions – but you can’t do both. But at least you’re free to pick the option that works best for you.
Whether you’re better off itemizing or taking the Standard Deduction depends on your own financial situation. However, about 90% of all taxpayers end up claiming the Standard Deduction each year. Those who itemize tend to be higher-income taxpayers, which makes sense since they typically pay more in state and local taxes, have higher mortgage interest payments, and give more to charity.
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