Don’t overlook these common tax deductions

One of the ways to reduce your liability this tax year is to decrease your taxable income. And, the best way to do this is by taking advantage of tax deductions. There are some common tax deductions you can take “above the line” that reduce your Adjusted Gross Income on your tax return. Others will be considered “below the line” and they will reduce your taxable income.

Wondering what might apply to you? Check out our list of common and valuable tax breaks.

What is a tax deduction?

A tax deduction reduces the amount of income subject to taxation from the Internal Revenue Service (IRS), ultimately reducing your overall tax liability.

There are two types of tax deductions: above-the-line deductions and below-the-line deductions. We’ll give you a brief description of both as we dive in and later, a side-by-side comparison.  

Deductions for taxes: A list of helpful options

From gig worker perks like the tip deduction, to retirement contributions, here’s a tax deduction list.

Above-the-line deductions:

Deductions subtracted from your gross income to calculate your adjusted gross income are known as “Above-the-line” deductions.

1. Retirement contributions and Traditional IRA deductions

If you contribute to a tax-advantaged traditional retirement account (IRA, 401(k), etc.), you may owe less tax than if you didn’t contribute. With a 401(k), you might not even realize you’re receiving an exclusion if you have your contribution automatically made in conjunction with your paycheck. The money comes out before the taxes do, resulting in a reduction of your taxable income.

With a Traditional IRA, you can still get a tax deduction without requiring access to an employer plan. However, your tax break may be limited if you also participate in an employer plan. For self-employed taxpayers, SEP IRA and SIMPLE IRA contributions are “above the line” tax deductions. See the other self-employed deductions below.

2. Student loan interest deduction

Did you know you can deduct up to $2,500 of your student loan interest? This education expense deduction is “above the line,” so you don’t have to itemize in order to take advantage of it, but you need to make below a certain level of income to qualify.

3. Self-employment expenses

With working side hustles becoming more popular recently, it’s no surprise that self-employment expenses are more common. For example, if you pay for your own qualified health insurance, that may count as an “above the line” deduction. Also, you can deduct one-half of your self-employment tax above the line.

On top of that, you can deduct business expenses like internet costs, office supplies, advertising, and business travel from your business income. And, for qualifying individuals, you can take the home office deduction!

4. Home office tax deductions

Speaking of self-employment, if you’re self-employed and have a home office that meets IRS standards, you can take a tax write-off for it called the home office deduction. For example, if your home office represents 4% of your home’s total square footage, you may be eligible to deduct 4% off that property’s utilities, insurance, and property taxes. Just remember there are strict rules around what constitutes a home office with “regular and exclusive use.”

5. HSA contributions

Health Savings Accounts (HSAs) are gaining in popularity as health care costs rise and as more employers put more of the cost of insurance on employees. Your after-tax HSA contributions are tax-deductible. Not only does the money grow tax-free when you use it for qualified health care costs, but you can use your contributions to reduce your tax liability to boot!

6. Alimony paid

If you pay alimony, you could take an above-the-line tax deduction. Generally, alimony is not deductible if your divorce was finalized after 2018. To qualify for the alimony tax deduction:

• You must make the payment in cash, not property
• The spouse must receive the payment under a divorce or separation agreement. The agreement can’t specifically exclude the payment from being:
  • Included in the recipient’s income
  • Deducted by the payor spouse
• You can’t reside in the same household as your former spouse when the payment is made if divorced or legally separated.
• Liability for payments must end upon the death of either spouse.

7. Educator expenses

Teachers who incur out-of-pocket expenses can reduce their AGI by offering a tax deduction of up to $300 (for 2025) for qualified K-12 education items that are used for the classroom. The deduction rises to $600 (for 2025) if an educator is married to another eligible educator and filing under the status Married Filing Jointly. Starting in tax year 2026, educators can also deduct qualifying educator expenses as an itemized deduction without limitation.

Below-the-line deductions:

Below-the-line deductions only available to itemizers

It is beneficial to claim itemized deductions if your total deductions are more than your standard deduction.

8. Below-the-line charitable donations deduction

You will need to itemize your deductions if you want to deduct your below-the-line charitable donations. Many people find it worth itemizing these deductions—particularly if you give regularly to a church or other charity. For 2026, the One Big Beautiful Bill Act (OBBBA) also allows an above-the-line charitable deduction of up to $1,000 (and $2,000 for joint filers).

It’s also possible to deduct the current fair market value of goods you donate to charity. Make sure you get a receipt for your donations, whether they are cash or goods. And don’t forget to keep track of your mileage if you drive on behalf of a charity; that’s tax-deductible, too.

9. Mortgage interest deduction

If you own a home and itemize, you can deduct the qualified interest you pay on your mortgage. It’s also possible to deduct refinancing points and other aspects of your home ownership costs, including property taxes. For tax year 2026, Private Mortgage Insurance (PMI) will once again be tax-deductible, thanks to a provision in the OBBBA.

10. State and local taxes

State and local taxes are a federal tax write-off. The 2025 limit for the SALT deduction is $40,000. State and local taxes include income, real estate, sales, and personal property taxes.

11. Medical expense deduction

If you’re itemizing deductions, you can take a medical expenses deduction if you have unreimbursed expenses that you paid and are more than 7.5% of your Adjusted Gross Income. Learn more about the medical expense deduction.

Below-the-line deduction available to itemizers and non-itemizers

12. Tips deduction

The deduction is available for up to $25,000 per return in tips for certain taxpayers. It is allowed for taxpayers who file in with the following filing statuses: 

• Single 
• Head of Household 
• Qualifying Surviving Spouse 
• Married Filing Jointly 

For Married Filing Jointly filers, the deduction is limited to $25,000 regardless of whether the spouses’ qualified tip income is more than $25,000.  

This deduction is not available to taxpayers who file Married Filing Separately. This deduction expires after 2028 tax year.

13. Overtime deduction

The new overtime deduction is available for eligible taxpayers in tax years 2025 through 2028. The deduction reduces taxable income by the taxpayer’s qualified overtime pay up to $12,500 (for Single, Head of Household, and Qualifying Surviving Spouse filers) or $25,000 (for Married Filing Jointly filers).

14. Car Loan Interest Deduction

From 2025 through 2028, you are allowed a personal deduction for interest paid on qualified loans for the purchase of new personal-use passenger vehicles, if eligibility requirements are met. The Car Loan Interest Deduction applies to loans for new vehicles purchased for personal use (not business or commercial).

15. An enhanced senior deduction

The senior deduction is a separate, additional deduction to reduce taxable income. Married couples filing jointly 65 or older can take a $6,000 deduction per eligible taxpayer ($12,000 in total). The deduction expires after the 2028 tax year.

Tax deduction examples—Above & below the line

Here’s a deeper dive on the difference between above-the-line and below-the-line tax deductions.

• Above-the-line deductions: Above-the-line tax deductions, or adjustments to income, are calculated by subtracting them from your gross income to arrive at your adjusted gross income (AGI). Reducing AGI can impact other items on your return, such as taxable Social Security and eligibility for credits. You can claim these tax breaks regardless if you claim the standard deduction or itemize your deductions.
• Below-the-line deductions: Below-the-line tax deductions, are now divided between itemized deductions and deductions available to itemizers and non-itemizers. Itemized deductions are expenses that you can deduct. And the new OBBBA deductions represent a portion of your income you can deduct. In both cases, the deductions are subtracted from your AGI to reduce your taxable income and tax liability. Itemized deductions are reported on Schedule A of your tax return (Form 1040) and the new OBBBA deductions are reported on Schedule 1-A of your tax return (Form 1040). 

What doesn’t count as an itemized tax deduction?

While there are many tax deductions that can help offset your tax, these (unfortunately) don’t qualify: 

• Car inspection fees
• Customs duties
• Employee business expenses (eliminated in 2017 tax law)
• Federal excise tax
• Federal income tax
• Gas tax
• License fees
• Gift tax
• Personal expenses
• Social Security, Medicare, FUTA, and RRTA taxes
• Real property improvements
• Tax paid for someone else

Remember to document!

No matter what tax deduction(s) you take, be sure to properly document them. This is especially true with self-employment expenses and with charitable donations. Keep receipts to back you up. Before you take a deduction, make sure you can prove that you are entitled to it, and consider consulting a tax professional to make sure you’re qualified for every tax credit or deduction you take on your tax return.

Get help claiming tax deductions

Understanding tax deductions is crucial if you want to maximize your potential tax refund and lower your tax bill at tax time.

Need help determining which tax credits or deductions apply to you? Whether you choose to file with a tax pro or file with H&R Block Online, we can help you navigate your taxes. We’ll help you find potential tax credits and breaks, and you can rest assured that we’ll get you the biggest tax refund possible.