10 Popular Tax Deductions
Are you overlooking some common tax deductions and missing out on savings? Tax deductions can save you money when you file your taxes by lowering your taxable income. Some popular deductions include medical expenses, savings contributions, and mortgage interest. Use this guide to learn what to write off on taxes to lower your tax bill and when to itemize vs. take the standard deduction.
The One Big Beautiful Bill that passed includes permanently extending tax cuts from the Tax Cuts and Jobs Act, including increasing the cap on the amount of state and local or sales tax and property tax (SALT) that you can deduct, makes cuts to energy credits passed under the Inflation Reduction Act, makes changes to taxes on tips and overtime for certain workers, reforms Medicaid, increases the Debt ceiling, and reforms Pell Grants and student loans. Updates to this article are in process. Check our One Big Beautiful Bill article for more information.
Key Takeaways
- Tax deductions reduce your taxable income whereas tax credits reduce your tax liability on a dollar-for-dollar basis.
- Some tax deductions, called above-the-line deductions or adjustments to income, can be taken from gross income to arrive at adjusted gross income.
- Tax deductions taken after your adjusted gross income are called below-the-line deductions and lead to your taxable income for the year.
What is a tax deduction?
A tax deduction is an amount of money that reduces your income subject to taxation, resulting in a lower tax bill.
What are above-the-line vs. below-the-line deductions?
Above-the-line tax deductions reduce your adjusted gross income (AGI), which is a figure the Internal Revenue Service (IRS) often uses to determine your eligibility for certain other tax deductions and credits.
After you calculate your total gross income for the year, you can deduct certain adjustments to income to determine your AGI, such as:
- student loan interest payments
- educator expenses
- self-employed health insurance payments
- certain alimony payments
- contributions to a retirement account
These adjustments to income are known as above-the-line tax deductions.
Tax deductions that are subtracted from your AGI are called below-the-line deductions. They allow you to reduce your adjusted gross income to determine your taxable income.
When talking about above-the-line and below-the-line deductions, your AGI is the “line.”
The most popular tax deduction is the Standard Deduction, which is a below-the-line lump sum amount that can be used to reduce your taxable income by a fixed amount. Many of the other below-the-line deductions are itemized deductions, such as deductions for:
In addition to itemized deductions, the Qualified Business Income deduction is also a below-the-line deduction. So are the temporary deductions (2025 to 2028 tax years) for:
Starting with the 2026 tax year, there's also a below-the-line deduction for cash contributions to charitable, religious, educational, scientific, literary, and certain other eligible organizations. This charitable deduction is only for non-itemizers (that is, people who take the Standard Deduction).
Above-the-line deductions tend to be less restrictive than below-the-line deductions since they often don’t have limitations related to your level of adjusted gross income. For example, deducting qualified self-employed health insurance premiums is allowed regardless of your adjusted gross income.
What are some of the most popular tax deductions to claim on your tax return?
1. Standard Deduction
The Standard Deduction allows most taxpayers to shelter at least some portion of their income from federal income tax. The Standard Deduction generally increases each year due to inflation.
You typically have the option of claiming either the Standard Deduction or itemizing your deductions.
How much is the standard deduction?
The amount of your Standard Deduction depends on your filing status, age, and other factors.
|
2026 Standard Deduction Amounts |
|
|---|---|
|
Single or Married Filing Separately |
$16,100 |
|
Married Filing Jointly |
$32,200 |
|
$24,150 |
|
For 2025, the amounts were:
|
2025 Standard Deduction Amounts |
|
|---|---|
|
Single or Married Filing Separately |
$15,750 |
|
Married Filing Jointly |
$31,500 |
|
Head of Household |
$23,625 |
2. Overtime pay deduction
Starting with the 2025 tax year, eligible workers can deduct up to $12,500 of overtime pay earned during the year (up to $25,000 for married couples filing a joint return). However, the overtime deduction is gradually reduced if your modified adjusted gross income (MAGI) is greater than $150,000 ($300,000 for joint filers). It's also set to expire after the 2028 tax year.
What is overtime pay qualifies for the deduction?
You can only claim the overtime deduction for “qualified overtime compensation,” which is overtime pay in excess of your regular rate of pay. According to the IRS, this is the “half” portion of the “time-and-a-half” pay required by federal labor laws. For example, if you’re normally paid $20 per hour, but you receive $30 per hour for any overtime worked ($20 x 1.5 = $30), you can only deduct the extra $10 of pay.
3. Tip income deduction
Workers who receive tips may be able to deduct all or some of their tip income. If you qualify, you can deduct up to $25,000 of certain tips received during the year. However, the tip deduction is gradually reduced – potentially to $0 – if your MAGI is greater than $150,000 ($300,000 for joint filers).
The tip deduction was first available for the 2025 tax year, but it's only available through the 2028 tax year.
Do all tips qualify for the tip deduction?
Some tips don't qualify for the tip deduction. For instance, you can only deduct tips received through a job that “customarily and regularly” received tips before 2025. The IRS has a list of jobs that satisfy this requirement on its website.
In addition, you can only deduct "cash" (or cash equivalent) tips. The tip must also be:
- paid voluntarily, with no consequence if it’s not given
- not negotiated
- determined by the person giving the tip
4. IRA contributions deduction
If you’re interested in saving for retirement in a tax-smart manner, you might consider making contributions to a traditional individual retirement account, or IRA.
How do IRA deductions work?
Often, you can deduct IRA contributions from your gross income, effectively lowering the current taxes you pay on investments you make toward retirement. These tax-deferred accounts don’t require you to pay tax on the contributions or any interest, dividends or other gains the account earns until you withdraw the money, usually in retirement.
In some cases, the amount you can deduct is limited by whether you or your spouse:
- contributes to an employer-sponsored retirement plan, such as a 401(k) or 403(b)
- your MAGI exceeds annual limits
If both you and your spouse are not covered by a retirement plan at work, you can deduct your contribution as long as you earn income during the year. For purposes of the IRA deduction, earned income excludes interest, dividends and similar types of investment income.
Are Roth IRA contributions deductible?
Roth IRA accounts function in the opposite manner as traditional IRAs, allowing you to make after-tax contributions (no current deduction). These accounts don’t typically require you to pay taxes on the contributions you made or on any gains you realize in the account when you withdraw the money in retirement.
5. Health savings account (HSA) deduction
A Health Savings Account (HSA) is an account for pre-taxed money that is saved for medical expenses. To qualify, you need a high-deductible health care plan.
How much is the HSA deduction?
For 2026, the maximum HSA deduction available is $4,400 for individual health insurance coverage and $8,750 for family coverage (up from $4,300 and $8,550, respectively, for 2025). If you're 55 or older, you can contribute an additional $1,000 per year. For 2027, the contribution limits are $4,500 if you're covered by an individual health plan, or $9,000 if you're covered by a family plan.
What are the tax benefits of HSA contributions?
HSAs offer three main tax benefits:
- Contributions to HSAs are a tax deduction and withdrawals aren’t subject to federal income taxes if used for qualifying medical expenses. Your contributions may not be a deduction for state-level income taxes in some states.
- Some HSA accounts allow you to invest your contributions or earn interest on your balance. These earnings are generally tax-free.
- When you take distributions from an HSA to pay for qualified medical expenses, these funds are generally tax-free
How do you report HSA contributions on your taxes?
If you made contributions to your HSA, you’ll likely receive a Form 5498-SA from your HSA provider. Likewise, if you used funds from your HSA you should receive a Form 1099-SA from your provider. Form 8889 is used to report HSA information on your federal income tax return.
6. Senior deduction
The Senior Deduction" is available to anyone who is at least 65 years old by the end of the tax year. However, the deduction only applies for the 2025 through 2028 tax years.
How much is the Senior Deduction?
The Senior Deduction is generally equal to $6,000. If you’re married and both you and your spouse are eligible, both of you can claim the deduction on a joint return (for a total of $12,000).
However, the $6,000-per-person deduction is gradually phased-out if your MAGI is more than $75,000 ($150,000 for married couples filing a joint return).
7. State and local taxes (SALT) deduction
When you make state and local tax payments, they’re generally deductible from your federal income. This may include:
- sales tax
- real estate tax
- property tax
- state and local income tax
You can only deduct state and local income tax or state and local sales tax. You can’t deduct both.
The deduction for state and local taxes is an itemized deduction and is limited to $40,400 for 2026 ($40,000 for 2025), but it can be reduced based on your Modified Adjusted Gross Income.
8. Medical expenses deduction
If you spent a considerable amount of money paying for medical expenses, these costs may be tax-deductible. Deductible medical expenses can include:
- insurance
- doctors
- hospitals
- prescriptions
- driving to medical appointments
- lodging related to medical appointments and procedures
- medical supplies
If a medical professional prescribes treatment for a medical condition that results in expenses such as purchasing exercise equipment, a spa or swimming pool, these may be tax-deductible as well.
How do you know if you can claim the medical expense deduction?
To claim these medical expenses as a deduction on your return, they’ll need to exceed 7.5% of your taxable income. You can only claim this deduction if you itemize your tax deductions.
9. Student loan interest deduction
If you make interest payments on a qualified student loan, you may be able to claim all or a portion of the interest you pay as a tax deduction. Your tax deduction is limited to interest up to $2,500 or the amount of interest you actually paid, whichever is less.
Who qualifies for the student loan deduction?
You’ll also need to meet some other criteria to claim this deduction on your return:
- You file taxes under any filing status but married filing separately
- You and your spouse, if filing jointly, can’t be claimed as dependents on someone else’s return, or
- For the 2026 tax year, your MAGI is under $100,000, or $205,000 if you're married and filing a joint return with your spouse ($95,000 and $195,000, respectively, for 2025).
How do you claim the student loan interest deduction?
To claim the student loan interest deduction, you don’t need to itemize your deductions. Because student loan interest counts as an above-the-line deduction, or an adjustment to income, you may be able to claim the deduction without itemizing if you meet the requirements above.
If you paid $600 or more in student loan interest to a single lender during the year, you should receive a 1098-E form showing your interest payments during the year. You can use this information to prepare your federal tax return.
10. Charitable contributions tax deduction
If you give money or property to charitable, religious, educational, scientific, literary, or certain other organizations, some or all of your donation might be tax deductible.
Traditionally, you had to itemize to claim a charitable tax deduction. However, starting with the 2026 tax year, non-itemizers can deduct up to $1,000 ($2,000 for joint filers) of cash donations (a similar deduction was allowed for the 2020 and 2021 tax years).
There are also limits on the itemized deduction for charitable donations. For instance, the itemized deduction for cash donation generally can't exceed 60% of your AGI. Also, starting in 2026, you can only deduct eligible donations that exceed 0.5% of your AGI.
What can volunteers write-off as a charitable deduction?
While you can’t deduct the value of your time when you volunteer, you can typically deduct unreimbursed out-of-pocket expenses, 14 cents per mile driven for volunteer work (plus any parking and tolls you paid). However, you must itemize to claim a deduction for these expenses.
|
Year |
Itemizers: Cash Contribution Limit |
Non‑Itemizers: Cash Deduction |
Notes |
|
2020 |
Up to 100% of AGI for qualifying cash gifts |
Up to $300 per return |
CARES Act temporarily suspended the 60% AGI limit. |
|
2021 |
Up to 100% of AGI for qualifying cash gifts |
Up to $300 ($600 if married filing jointly) |
Final year of the temporary deduction for non-itemizers. |
|
2022 |
Back to 60% of AGI for qualifying cash gifts (CARES Act relief expired) |
No deduction |
Standard rules restored. |
|
2023 |
60% of AGI |
No deduction |
Standard rules apply. |
|
2024 |
60% of AGI |
No deduction |
Standard rules apply. |
|
2025 |
60% of AGI |
No deduction |
Standard rules apply. |
|
2026 |
60% of AGI |
Up to $1,000 ($2,000 if married filing jointly) |
"One Big Beautiful Bill" reinstates deduction for non-itemizers at higher amount (makes other changes to itemized deduction). |
Should I itemize my deductions?
The decision to itemize deductions typically comes down to whether your eligible itemized deductions exceed the value of your applicable Standard Deduction.
If you have minimal expenses, you’re generally better off claiming the Standard Deduction. On the other hand, if you have a significant amount of expenses that can be used as itemized deductions that exceed the Standard Deduction, you might be better off itemizing your deductions.
However, starting with the 2026 tax year, the overall amount of itemized deductions is generally reduced for people in the highest (37%) tax bracket. If that's the case, your itemized deductions for the year will be cut by approximately 5.4% of whichever of the following amounts is smaller:
- your total itemized deductions
- your taxable income above the threshold for the 37% bracket, plus your total itemized deductions (see the current tax brackets for the threshold that applies to your filing status)
Whether you itemize or take the Standard Deduction, you may be able to claim one or more of the other popular tax deductions listed above.
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