Most tax-deductible expenses fall into three buckets: deductions everyone can claim without itemizing, itemized deductions you claim instead of the standard deduction, and business expenses for self-employed workers. Which ones save you money depends on your filing status, income, and whether your itemized deductions exceed the standard deduction of $16,100 for single filers, $32,200 for married couples filing jointly, or $24,150 for head of household filers.
Deductions You Can Claim Without Itemizing
Some deductions reduce your taxable income regardless of whether you itemize. These are sometimes called “above the line” deductions because they’re subtracted from your gross income before the standard deduction even enters the picture. That makes them valuable for nearly every taxpayer.
Several new deductions are available starting with the 2026 tax year. If you earn tips, you may deduct up to $25,000 in qualified tip income. Overtime pay is deductible up to $12,500 for single filers ($25,000 for joint filers). Interest on a car loan for a qualifying passenger vehicle is deductible up to $10,000. And taxpayers age 65 or older can claim an additional $6,000 deduction on top of the standard deduction.
Longer-standing above-the-line deductions include contributions to a health savings account (HSA), student loan interest (up to $2,500 per year), contributions to a traditional IRA, and the educator expense deduction for teachers who buy classroom supplies out of pocket. Self-employed workers can also deduct half of their self-employment tax and 100% of their health insurance premiums here.
Itemized Deductions and When They Matter
You choose either the standard deduction or itemized deductions, whichever is larger. If you own a home in a high-tax area, have significant medical bills, or make large charitable donations, itemizing could save you more. Here are the main categories.
State and Local Taxes
You can deduct state and local income taxes (or sales taxes, but not both) plus property taxes, up to a combined cap of $40,400. This limit, sometimes called the SALT cap, was made permanent by the One Big Beautiful Bill Act in 2025. For many homeowners in states with high income or property taxes, this deduction alone can be substantial.
Mortgage Interest
Interest paid on mortgage debt of $750,000 or less is deductible if you itemize. This applies to your primary residence and one additional home. If you bought your home before December 15, 2017, the older limit of $1 million in mortgage debt still applies to that loan. Points paid at closing are also deductible, either all at once in the year you paid them or spread over the life of the loan.
Medical and Dental Expenses
Out-of-pocket medical costs that exceed 7.5% of your adjusted gross income (AGI) are deductible. If your AGI is $80,000, only medical expenses above $6,000 count. Qualifying expenses include health insurance premiums you pay with after-tax dollars, copays, prescriptions, dental work, vision care, and even mileage driven to medical appointments. Most people don’t hit this threshold in a normal year, but a major surgery, ongoing treatment, or expensive dental work can push you over.
Charitable Contributions
Donations to qualified charities are deductible when you itemize. Cash contributions are generally deductible up to 60% of your AGI. Donated property, like clothing or furniture, is deductible at fair market value. Keep receipts for every donation, and for any single contribution of $250 or more, you need a written acknowledgment from the charity. Volunteering your time isn’t deductible, but mileage driven for charitable work is.
Business Expenses for Self-Employed Workers
If you run a business or freelance, your ordinary and necessary business expenses reduce your taxable income directly on Schedule C. “Ordinary” means common in your line of work. “Necessary” means helpful and appropriate, though it doesn’t have to be absolutely essential. These deductions lower both your income tax and your self-employment tax.
Home Office
To deduct a home office, you must use a specific area of your home exclusively and regularly for business. A desk in the corner of your bedroom counts only if that space is never used for personal purposes. The simplest way to calculate it is the IRS’s simplified method: $5 per square foot of dedicated office space, up to 300 square feet, for a maximum deduction of $1,500. You can also calculate actual expenses (a share of rent or mortgage interest, utilities, insurance, and repairs) proportional to the square footage your office occupies, which often produces a larger deduction but requires more recordkeeping.
Vehicle and Travel Expenses
Business mileage is deductible at 70 cents per mile for 2025. This covers driving to client meetings, job sites, or a second workplace, but not your regular commute from home to your main office. Instead of the standard mileage rate, you can deduct actual vehicle costs (gas, insurance, repairs, depreciation) and split them based on the percentage of miles driven for business. Keep a mileage log either way.
Travel expenses count when a trip requires you to be away from your home area long enough that you need to sleep. Airfare, hotels, rental cars, baggage fees, and tips are all deductible. Meals during business travel are 50% deductible.
Equipment and Supplies
Office supplies, software subscriptions, professional tools, and other items you use in your business are deductible. For equipment expected to last more than a year, like a computer or camera, you normally spread the cost over several years through depreciation. But the Section 179 deduction lets you write off up to $2,500,000 of qualifying equipment in the year you buy it, which means most small businesses can deduct the full cost of equipment immediately rather than waiting years.
Other Common Business Deductions
- Professional services: Accounting, legal, and bookkeeping fees related to your business.
- Advertising and marketing: Website hosting, online ads, business cards, and promotional materials.
- Insurance: Business liability insurance, errors and omissions coverage, and similar policies.
- Education: Courses, workshops, and certifications that maintain or improve skills required in your current business.
- Phone and internet: The business-use percentage of your phone bill and home internet.
How to Decide Between Standard and Itemized
The math is straightforward. Add up your potential itemized deductions: SALT, mortgage interest, medical expenses above the 7.5% floor, and charitable giving. If the total exceeds your standard deduction, itemize. If not, take the standard deduction and still claim any above-the-line deductions on top of it.
For most taxpayers, the standard deduction wins. Roughly 90% of filers take it. But certain life events can tip the balance: buying a home, paying off large medical bills, making a big charitable gift, or living in a state with high income and property taxes. It’s worth running the numbers both ways each year, since your situation can change. Tax preparation software will typically do this comparison automatically and recommend whichever approach gives you the larger deduction.
Records You Should Keep
The IRS requires documentation for every deduction you claim. For charitable donations, save receipts and written acknowledgments. For business expenses, keep receipts, invoices, and bank or credit card statements. For vehicle deductions, maintain a mileage log with dates, destinations, and business purpose. For medical expenses, save explanation-of-benefits statements and receipts for out-of-pocket costs. Store these records for at least three years after filing, since that’s the standard window the IRS has to audit a return.