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When it comes to filing your taxes, tax deductions and credits can make a big difference. Deductions and credits ultimately reduce the amount of taxes you’ll have to pay, so understanding how they work can be crucial to maximizing your tax refund. We discuss tax credits more in depth in our recent post on What’s Changed in Tax Season 2025. Today, we’re focusing on tax deductions, common deductions, and how to determine if you might qualify.
Tax deductions are qualifying expenses or losses that can be subtracted from your taxable income when filing, reducing the amount of taxes you owe. Remember, you should keep any documentation (like receipts) to show these expenses when it comes time to file. Tax deductions can be itemized if you qualify for a variety, or you can opt for the standard deduction provided by the IRS. There are some itemized deductions that you can actually claim on top of the standard deduction (but not all of them, so be sure to double check!).
The standard deduction is a lump sum, determined by the IRS and adjusted year over year, that can be deducted from your income to reduce your taxable income and, therefore, your tax bill. In tax year 2024, the standard deduction is $14,600 for people filing as single or married filing separately, $29,200 for married couples that are filing jointly or for a qualifying surviving spouse, and $21,900 for those filing as head of household.
Generally, there’s a tradeoff when you opt for the standard deduction. As we mentioned earlier, there are some tax deductions you can claim on top of the standard deduction (we’ll expand on these scenarios later on), although most deductions cannot be claimed in conjunction with the standard deduction. So, you may need to choose whether you want to take the standard deduction or itemize your deductions. At the end of the day, you’ll want to choose whichever deductions (standard or itemized) will reduce your taxable income the most to maximize your potential refund or lower your amount of taxes owed.
Itemized deductions are deductions that you must claim individually and include documented proof to qualify for. This proof can be in the form of statements, receipts, or other documents depending on the deduction. Tax deductions might apply to you if you’ve experienced expenses or losses during the tax year. Take a look at some of the common examples below to see if you might qualify for a deduction (or a few) when filing this year. Keep in mind, deductions in this section cannot be claimed alongside the standard deduction (in the next section, we’ll talk about deductions you can take regardless of if you choose to use the standard deduction or itemize).
Charitable donations can be cash, check, or non-monetary donations to a tax exempt organization. Gifts or donations to individuals are not eligible for tax deductions. You’ll need to hold onto proof of this donation, whether that’s a bank record or or a written document from the qualified organization (like a receipt) that includes the name of the organization, the amount, and the date of the contribution. For non-cash donations above $500, you’ll need to complete a Form 8283 and attach it to your tax return.
Through tax year 2025 (taxes you’ll file at the beginning of 2026), individuals can deduct casualty or theft losses of personal-use property that can be attributed to a federally declared disaster. The first $100 per casualty is not deductible, so your deduction will be $100 less than the amount of the casualty. Then, you must also reduce your deduction by 10% of your adjusted gross income (AGI). If this brings your casualty deduction to $0 or below, you are no longer eligible for the deduction.
If medical or dental expenses for yourself, your spouse, or your dependents is adobe 7.5% of your AGI, you may qualify for a tax deduction. The deduction only applies to expenses that weren’t covered by insurance or reimbursed in another way. Expenses for which you’ve used a flexible spending account or health savings account also aren’t eligible for tax deductions. You can use this IRS tool to determine if your medical or dental expenses are deductible.
Interest on a mortgage for your main or second home may be tax deductible if your debt (mortgages used to buy, build, or improve your first and second home, if applicable) is at or below $750,000. This can include a mortgage to buy or build your home, a second mortgage, a line of credit, or a home equity loan. Remember, your second home only counts as a second home if you stayed there more than 14 days or more than 10 percent of the number of days you rented it out at fair market value (whichever number of days is larger). You may not deduct interest on additional homes after the second, and the loans must be secured by the home to be eligible for deductions.
You may be eligible to deduct state and local income, sales, real estate, or personal property taxes that you’ve paid during the tax year. As of 2018, you can only deduct up to $10,000 in state and local income taxes. You can find the amount of state and local taxes withheld from your paychecks on your W-2 or 1099 forms and you’ll need to report it in the Schedule A section of your tax return. Alternatively, you could choose to deduct your state and local sales tax, instead of the income tax. If you choose to go the sales tax route and you’ve kept your receipts throughout the year, you can calculate the actual amount of sales taxes you’ve paid. However, if you don’t keep every receipt, you’ll need to estimate the amount with the IRS’s calculator. Real estate taxes on the value of your home can be deducted in addition to the income or sales tax you deducted.
As we mentioned earlier, there are some itemized deductions you can deduct regardless of whether you choose to use the standard deduction or itemize. Keep reading to learn which deductions can apply and how you can get the biggest refund possible.
If you’ve paid interest on a qualified student loan during the tax year, you can deduct that from your taxable income. You can deduct either the amount of interest you paid, or $2,500, whichever is lesser. Qualified loans are used specifically for school costs, like room and board, rather than any personal expenses. For tax year 2024, those filing as single with modified adjusted gross incomes (MAGIs) of $95,000 or less and married couples filing jointly with MAGIs of $195,000 or less are eligible for the deduction.
For tax year 2024, the HSA deduction may be up to $4,150 for self-only coverage or up to $8,300 if you have family coverage, an increase from the 2023 deductions. If you were 55 years old or older at the end of 2024, you may be able to deduct an additional $1,000.
If you use your car solely for business purposes, you can deduct the full costs of its ownership and operation. If you use it for both business and personal use, you’ll need to ensure you only take deductions for the business uses. To determine your deductions for using your car for business purposes, you can either use the standard mileage rate method or the actual expense method. To use the actual expense method, you’ll need to calculate the actual costs of the car’s business uses. This can include things like gas, oil, repairs, insurance, and registration fees, among others, for the business miles used.
Traditional IRAs are tax-deferred, meaning you don’t pay associated taxes on that income until you withdraw the funds from the account. If you (and your spouse, if married) don’t have a retirement account through your employer, your full contribution amount is tax deductible. If you are covered by an IRA through your employer, you can determine your deduction amount and eligibility based on your MAGI.
