A guide to commonly missed tax deductions for individuals, including itemized deductions, above-the-line deductions, and situation-specific write-offs that can lower your tax bill.
Above-the-Line Deductions (Available Even with Standard Deduction)
Deduct contributions to a traditional IRA (up to $7,000, or $8,000 if age 50+)
The full deduction is available if you're not covered by a workplace retirement plan. If you are covered, the deduction phases out at MAGI of $79,000-$89,000 (single) or $126,000-$146,000 (joint) for 2025.
Deduct student loan interest paid, up to $2,500
This deduction phases out at MAGI of $80,000-$95,000 (single) or $165,000-$195,000 (joint). You don't need to itemize. The lender sends Form 1098-E if you paid $600+ in interest during the year.
Deduct HSA contributions: $4,300 individual or $8,550 family for 2025
You must have a high-deductible health plan to contribute. If you're 55+, add $1,000 in catch-up contributions. HSA contributions reduce both income tax and self-employment tax, unlike 401(k) contributions.
Deduct educator expenses up to $300 for teachers (grades K-12)
This covers classroom supplies, books, software, and professional development courses. Both spouses can claim $300 each if both are eligible educators, for a total of $600 on a joint return.
Deduct alimony payments made under pre-2019 divorce agreements
Only alimony under agreements finalized before January 1, 2019 is deductible. Post-2018 agreements are not deductible by the payer and not taxable to the recipient. The recipient's SSN must be on your return.
Itemized Deductions: Medical and Dental
Total unreimbursed medical and dental expenses exceeding 7.5% of AGI
Qualifying expenses include doctor visits, prescriptions, dental work, vision care, mental health services, and medical equipment. On AGI of $80,000, only expenses above $6,000 are deductible.
Include health insurance premiums you paid with after-tax dollars
Premiums paid through an employer's pre-tax plan are already excluded from your W-2 income and can't be deducted again. Only include premiums you paid out of pocket with post-tax money.
Count long-term care insurance premiums (age-based limits apply)
Deductible long-term care premiums for 2025 range from $480 (age 40 or under) to $6,010 (age 71+) per person. These count toward your total medical expenses subject to the 7.5% AGI floor.
Include mileage driven for medical purposes at 22 cents per mile
Track miles driven to doctor appointments, pharmacies, and hospitals. Parking and tolls at medical facilities are also deductible. Keep a mileage log with dates, destinations, and purpose.
Itemized Deductions: Taxes and Interest
Deduct state and local taxes (SALT) up to the $10,000 cap
SALT includes state income tax (or sales tax if higher), local income tax, and property tax. If you live in a no-income-tax state, you can deduct state sales tax instead — use the IRS sales tax calculator for the amount.
Deduct mortgage interest on up to $750,000 of home acquisition debt
Your lender sends Form 1098 showing interest paid. Points paid on a home purchase are deductible in the year of purchase. Refinance points must be deducted over the life of the loan.
Deduct investment interest expense up to the amount of net investment income
Report this on Form 4952. Investment interest includes margin interest from brokerage accounts. Excess interest carries forward to future years. This does not apply to interest on tax-exempt investments.
Deduct real estate taxes on your primary residence and second home
Property taxes are part of the $10,000 SALT cap. If your property taxes alone are $10,000+, adding state income tax won't increase your deduction. Some states offer workarounds through pass-through entity tax elections.
Itemized Deductions: Charitable Contributions
Deduct cash donations to qualified charities (up to 60% of AGI)
Keep bank statements or written receipts for all cash donations. For donations of $250 or more, you need a contemporaneous written acknowledgment from the charity stating no goods or services were received in exchange.
Deduct the fair market value of donated goods (clothing, furniture, vehicles)
Used clothing and household items must be in good condition to be deductible. For items worth over $500, file Form 8283. For donated vehicles worth over $500, the deduction is limited to the charity's actual sale price.
Deduct mileage driven for charitable purposes at 14 cents per mile
This rate is set by statute and doesn't change with gas prices. You can also deduct parking and tolls while doing volunteer work. Keep a log with dates, miles, and the organization served.
Consider donating appreciated stock instead of cash to avoid capital gains tax
If you donate stock held over 1 year, you deduct the full fair market value and pay zero capital gains tax. On a stock worth $10,000 with a $3,000 cost basis, you save the capital gains tax on $7,000 of gain.
Commonly Missed Deductions
Deduct job search expenses if you itemize (same occupation only)
After the 2017 tax reform, unreimbursed employee expenses including job search costs are no longer deductible for W-2 employees through 2025. Self-employed individuals can still deduct business development costs on Schedule C.
Deduct gambling losses up to the amount of gambling winnings
You must report all gambling winnings as income, but you can offset them with losses if you itemize. Keep detailed records: dates, locations, amounts wagered, and amounts won or lost. W-2G forms are issued for winnings above certain thresholds.
Deduct casualty and theft losses in federally declared disaster areas
Since 2018, personal casualty losses are only deductible if they occur in a federally declared disaster area. The loss must exceed $100 per event, and total losses must exceed 10% of AGI. File Form 4684 to claim.
Deduct state and local sales tax instead of income tax if it saves more
This benefits residents of no-income-tax states like Texas, Florida, and Washington. Use the IRS sales tax deduction calculator to determine your amount. Add sales tax on major purchases like a car or boat to the IRS table amount.
Deduct energy-efficient home improvements under the Residential Clean Energy Credit
The Residential Clean Energy Credit (Form 5695) covers 30% of solar panels, solar water heaters, wind turbines, and geothermal heat pumps with no dollar cap. The Energy Efficient Home Improvement Credit covers up to $3,200 per year for insulation, windows, doors, and heat pumps.
Frequently Asked Questions
What is the difference between a tax deduction and a tax credit?
A tax deduction reduces your taxable income, saving you money at your marginal tax rate. A $1,000 deduction in the 22% bracket saves $220. A tax credit reduces your tax bill dollar-for-dollar — a $1,000 credit saves exactly $1,000 regardless of your bracket. Credits are more valuable than deductions of the same amount. Some credits are refundable (you get the money even if you owe no tax), while others are nonrefundable (they only reduce your tax to zero).
Can I deduct state and local taxes on my federal return?
Yes, but the SALT deduction (state and local taxes) is capped at $10,000 per return ($5,000 if married filing separately). This cap includes state income taxes (or state sales taxes if you choose), plus local property taxes combined. Before 2018, SALT was unlimited. The $10,000 cap is scheduled to remain through the 2025 tax year. Taxpayers in high-tax states like New York, California, and New Jersey are most affected by this limitation. Tax laws change frequently — verify current rules with the IRS or a tax professional.
What medical expenses can I deduct on my taxes?
You can deduct unreimbursed medical and dental expenses that exceed 7.5% of your adjusted gross income. Qualifying expenses include doctor visits, prescriptions, surgery, dental work, vision care, hearing aids, mental health treatment, and medical transportation. Health insurance premiums you pay with after-tax dollars also count. Long-term care insurance premiums are deductible up to age-based limits ($5,880 for ages 61-70 in 2024). Cosmetic procedures and gym memberships do not qualify.
What deductions can I take without itemizing?
Above-the-line deductions (adjustments to income) are available whether you itemize or take the standard deduction. These include student loan interest (up to $2,500), traditional IRA contributions (up to $7,000, or $8,000 if 50+), self-employed health insurance premiums, half of self-employment tax, HSA contributions ($4,150 individual or $8,300 family for 2024), educator expenses (up to $300), and alimony payments for pre-2019 agreements.
How much can I deduct for charitable donations?
Cash donations to qualifying charities are deductible up to 60% of your AGI. Appreciated assets (stocks, real estate) donated to public charities are deductible at fair market value up to 30% of AGI. Donations to private foundations are limited to 30% (cash) or 20% (property) of AGI. Excess donations carry forward for up to 5 years. For cash gifts under $250, a bank statement or receipt suffices. Gifts of $250 or more require a written acknowledgment from the charity before you file.