You can claim two types of tax breaks: deductions that reduce the income you’re taxed on, and credits that directly reduce what you owe. Some require you to itemize your expenses on your return, while others are available to everyone regardless of filing method. Knowing which ones apply to your situation can save you hundreds or even thousands of dollars.
The Standard Deduction
The standard deduction is a flat amount the IRS lets you subtract from your income before calculating your tax. Most people take it because it’s simple and, for many filers, larger than what they’d get by listing individual expenses. For the 2026 tax year, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for head of household filers.
If you’re 65 or older, or legally blind, you get an additional amount on top of the standard deduction. You don’t need receipts or records to claim it. The standard deduction is your baseline, and you should only itemize if your total eligible expenses exceed it.
Deductions You Can Claim Without Itemizing
Certain deductions, sometimes called “above-the-line” deductions, reduce your gross income regardless of whether you take the standard deduction or itemize. These are especially valuable because you get them on top of whichever method you choose. They include:
- Student loan interest: You can deduct up to $2,500 in interest paid on qualified student loans, even if someone else made the payments on your behalf, as long as you’re legally obligated on the loan.
- IRA contributions: Money you put into a traditional IRA may be deductible depending on your income and whether you have a retirement plan through work.
- Health savings account (HSA) contributions: If you have a high-deductible health plan, contributions to your HSA reduce your taxable income.
- Educator expenses: Teachers and other eligible educators can deduct up to $300 in out-of-pocket classroom expenses like supplies, books, and software.
- Business use of your home or car: If you’re self-employed, portions of your home and vehicle expenses can reduce your income directly.
- Self-employment tax: You can deduct half of the self-employment tax you pay, which offsets the fact that you’re covering both the employer and employee shares of Social Security and Medicare.
- Early withdrawal penalties: If your bank charged a penalty for pulling money out of a CD or savings account early, that penalty is deductible.
Itemized Deductions Worth Tracking
If your individual expenses add up to more than the standard deduction, itemizing on Schedule A will give you a larger tax break. The main categories of itemized deductions are medical expenses, state and local taxes, mortgage interest, and charitable contributions.
Medical and Dental Expenses
You can deduct medical and dental expenses that exceed 7.5% of your adjusted gross income. That threshold is steep: if you earned $60,000, only the portion of medical costs above $4,500 counts. This deduction typically only helps if you had a major surgery, extensive dental work, or ongoing treatment costs during the year. Eligible expenses include insurance premiums you paid with after-tax money, prescriptions, hospital bills, and even mileage driven to medical appointments.
State and Local Taxes
You can deduct state and local income taxes (or sales taxes, if your state has no income tax), plus property taxes. The combined cap on this deduction is $10,000 per return. If you live in a high-tax area and own property, you may hit that ceiling quickly.
Mortgage Interest
Interest paid on a mortgage for your primary home, and in some cases a second home, is deductible on loans up to $750,000. Your lender sends you a Form 1098 each year showing how much interest you paid. In the early years of a mortgage, when most of your payment goes toward interest rather than principal, this deduction can be substantial.
Charitable Contributions
Donations to qualified nonprofits are deductible if you itemize. Cash donations are straightforward, but you can also deduct the fair market value of donated goods like clothing, furniture, or a vehicle. Keep receipts for everything, and get a written acknowledgment from the charity for any single donation of $250 or more. Donations to individuals, political campaigns, or GoFundMe pages generally do not qualify.
Tax Credits That Reduce Your Bill
Credits are more powerful than deductions because they reduce your tax bill dollar for dollar. A $1,000 deduction might save you $220 in taxes (depending on your bracket), but a $1,000 credit saves you exactly $1,000.
Child Tax Credit
If you have children under 17, you may qualify for the Child Tax Credit. The credit amount and income phaseout thresholds can change year to year, so check the current limits when you file. A portion of the credit is refundable, meaning you can receive it even if you owe no federal tax.
Earned Income Tax Credit
The EITC is designed for low- and moderate-income workers. The amount depends on your income, filing status, and number of qualifying children. It’s fully refundable, so it can result in a payment to you even if your tax liability is zero. Many eligible filers miss this credit because they don’t realize they qualify, particularly workers without children who are eligible for a smaller credit.
Education Credits
Two credits help with college costs. The American Opportunity Tax Credit covers up to $2,500 per student for the first four years of higher education, and 40% of it (up to $1,000) is refundable. The Lifetime Learning Credit covers up to $2,000 per return for tuition and fees at eligible institutions, with no limit on the number of years you can claim it. You can’t claim both for the same student in the same year.
Other Credits Worth Checking
Several other credits apply to specific situations. The Child and Dependent Care Credit helps cover daycare or after-school care costs while you work. The Saver’s Credit gives low- and moderate-income workers a credit for contributing to a retirement account. Energy credits can offset part of the cost of installing solar panels, heat pumps, or energy-efficient windows in your home.
What Self-Employed Workers Can Claim
If you freelance, run a side business, or work as an independent contractor, you can deduct ordinary and necessary business expenses on Schedule C. These reduce your self-employment income, which lowers both your income tax and your self-employment tax (the 15.3% you pay to cover Social Security and Medicare).
Common deductible business expenses include advertising, office supplies, software subscriptions, professional services (like an accountant or attorney you hire for your business), business insurance, travel, and 50% of business meals. If you lease equipment or vehicles for work, those payments are deductible. If you buy equipment outright, you can often deduct the full cost in the year of purchase using what’s called a Section 179 deduction, rather than spreading it over several years.
Home Office Deduction
If you use part of your home regularly and exclusively for business, you can deduct a portion of your rent or mortgage interest, utilities, insurance, and repairs. There are two methods: the simplified method lets you deduct $5 per square foot of your home office, up to 300 square feet ($1,500 max). The regular method requires you to calculate the actual percentage of your home used for business and apply that to your real expenses using Form 8829. The simplified method is easier, but the regular method often yields a larger deduction if your home costs are high.
Vehicle Expenses
If you use your car for business, you can either deduct actual expenses (gas, insurance, repairs, depreciation) proportional to business use, or take the standard mileage rate. Whichever method you choose, keep a log of your business miles. Commuting from home to a regular workplace does not count, but driving between job sites, to client meetings, or to the post office for business shipments does.
How to Decide What to Claim
Start by adding up your above-the-line deductions, since you get those no matter what. Then compare your potential itemized deductions to the standard deduction for your filing status. If your mortgage interest, state taxes, charitable giving, and medical expenses together exceed the standard deduction, itemize. If not, take the standard deduction and move on.
Next, check every credit you might qualify for. Credits are where the real savings often hide, and they apply whether you itemize or not. If you have children, paid for education, saved for retirement on a modest income, or made energy improvements to your home, there’s likely a credit waiting for you. Keep receipts and records throughout the year so you’re not scrambling to reconstruct expenses at tax time.