Best tax deductions to claim this year

At its core, a tax deduction lowers the amount of your income the government actually taxes. The lower your taxable income, the smaller your tax bill.

A lower adjusted gross income (AGI) can also unlock other tax perks, including credits, phaseouts, and lower effective tax rates.

We asked tax experts which deductions make the biggest difference for the average filer. Here’s what they told us.

Learn more: What is taxable income, and how can you reduce it?

The best tax deductions really depend on how you file. Each year, you get to choose between the standard deduction or itemizing. That decision heavily influences which deductions are available to you.

The standard deduction

About 91% of all U.S. taxpayers took the standard deduction in 2023, according to the Tax Policy Center.

That makes it the most widely used tax break in the country — and it’s easy to understand why.

“Since it nearly doubled in 2018 and now rises with inflation, the standard deduction quietly became a middle-class tax cut,” said Craig Toberman, a CPA and certified financial planner at Toberman Becker Wealth in St. Louis. “This means millions no longer need to itemize to get meaningful tax relief.”

Uncle Sam is automatically shaving off $15,750 to $31,500 from your taxable income, without you lifting a finger. You don’t need a box of receipts or spreadsheets. The standard deduction is the baseline — everything else either stacks on top of it or replaces it.

And starting this year, taxpayers age 65 and older can claim a new “senior bonus” deduction of up to $6,000 (or $12,000 for married couples), which stacks on top of the standard deduction.

While it’s a massive boost for most, it comes with a catch: The extra senior benefit begins to phase out if your modified AGI exceeds $75,000 for individuals or $150,000 for married couples.

Learn more: Standard deduction vs. itemized: How to decide which tax filing approach is right for you

You can claim certain deductions even if you don’t itemize. These are known as “above-the-line” deductions, and they reduce your gross taxable income. Here are some of the most valuable ones you can take along with the standard deduction.

IRA and 401(k) contribution deduction

Think of retirement account contributions as a double win: Not only are you saving for the future, but you’re also lowering your taxable income this year.

Traditional 401(k) and traditional IRA contributions reduce your taxable income dollar for dollar, up to annual limits.

The 2025 tax year retirement contribution limits are:

“The retirement contribution deduction can be a very powerful planning lever because maxing a 401(k) can reduce taxable income in your high-earning years by over $20,000, while simultaneously funding future independence,” said Toberman.

If you’re a business owner or a freelancer, the tax-savings potential is even higher. Beyond standard IRAs, you can utilize a SEP IRA or a Solo 401(k) to shield a massive portion of your income.

Didn’t contribute to a retirement account last year? The IRS lets you make IRA contributions all the way until Tax Day (April 15, 2026) and apply them retroactively to your 2025 return. So long as your IRA was already open by Dec. 31, 2025, you can use these last-minute deposits to shrink your taxable income even with 2025 in the rearview mirror.

With expanded eligibility rules for 2026, soon more people can take advantage of the tax savings offered by health savings accounts (HSAs).

HSA contributions offer a triple tax advantage:

Contributions are tax-deductible.

The money grows tax-free.

Withdrawals for qualified medical expenses are tax-free. Once you turn 65, non-medical withdrawals are tax-free too.

To be eligible, you must be enrolled in a high-deductible health plan (HDHP). Starting in 2026, all Bronze and Catastrophic plans on the Health Care Marketplace will also work with HSAs.

Experts love HSAs because they can function like a second retirement account. You can invest the funds, let them grow, and even reimburse yourself years later for past medical expenses.

HSAs aren’t a good fit for everyone. Their high annual deductibles can leave people with chronic health issues facing hundreds of dollars in out-of-pocket costs as they pay their way toward a high deductible. But if you’re relatively healthy, you can use an HSA as another way to lower your tax bill and save for the future.

Learn more: FSA vs. HSA: Which account is best for you?

Whether you have federal or private student loans, you may be eligible to recoup some of your interest payments when you file your taxes,

You can deduct up to $2,500 in student loan interest each year, whether you take the standard deduction or itemize.

That said, experts were blunt about this tax deduction: It’s helpful, but limited.

“The student loan interest deduction helps at the margin, but it phases out quickly, so it often disappoints higher earners,” said Toberman.

For the 2025 tax year, the student loan interest deduction starts phasing out once your modified AGI hits $85,000 if you file as single or head of household, or $170,000 if you’re married filing jointly. It disappears entirely at $100,000 for single filers and $200,000 for married couples.

Learn more: Free tax filing: How to file your 2025 return for free

Itemizing generally only makes sense if your total itemized deductions exceed the standard deduction — again, that’s $15,750 for single filers or $31,500 for married couples.

But for homeowners, high earners in high-tax states, and some other filers, itemizing can still make sense.

If you itemize, here are some additional deductions to keep in mind.

State and local tax (SALT) deduction

For the 2025 tax year, homeowners in high-tax states are finally getting a reprieve as the state and local tax (SALT) deduction cap quadruples to $40,400.

This massive jump from the old $10,000 limit — which was set by the 2017 Tax Cuts and Jobs Act and remained in place through 2025 — is the defining tax change for many residents this year.

“The story of the year in 2026 is SALT,” said Robert Persichitte, a CPA and certified financial planner at Delagify Financial in Arvada, Colo.

The SALT deduction lets you deduct a variety of non-federal taxes you paid, including:

The previous $10,000 limit made SALT “either irrelevant or easy to ignore for most of the taxpayers I worked with,” said Persichitte.

That’s because lower-income homeowners often didn’t itemize, so their property taxes gave them zero federal benefit. Meanwhile, higher-income people in high-tax states usually hit the $10,000 cap with state income taxes alone, so their property taxes and other local taxes didn’t give them any additional juice on their federal return.

But with the cap jumping from $10,000 to $40,000 this tax year ($20,000 for married filing separately), some taxpayers could realize thousands of additional dollars in deductions and a meaningful haircut to their federal tax bill.

“Items like property tax, vehicle registration tax, and sales tax on large purchases are going to start mattering again,” said Persichitte. “So be sure to share them with your tax preparer.”

Learn more: 8 tax deductions for homeowners

You can deduct interest paid on a mortgage used to buy, build, or substantially improve your primary or secondary residence. The deduction applies only to interest — not principal — which is why it’s most valuable in the early years of a mortgage.

“Higher interest rates are starting to bump up against the standard deduction,” said Persichitte. “Mortgage interest is important for taxes again.”

Most taxpayers can deduct all interest, but limits apply based on when the mortgage was taken out. Debt incurred before Dec. 16, 2017, is deductible up to $1 million, while newer loans are capped at $750,000 ($375,000 if married filing separately).

A new change for this year: Private mortgage insurance (PMI) and other mortgage insurance premiums are once again deductible as qualified residence interest. This is a permanent change, though it phases out for homeowners with a modified AGI above $100,000.

Because you can now deduct up to $40,400 in SALT plus your mortgage interest, more people may find it beneficial to itemize in 2026 rather than take the standard deduction.

“It’s worth checking out again,” said Persichitte.

If you give to qualified charities and itemize, you can deduct those donations.

Cash donations are generally deductible up to a percentage of your income, while donated goods are typically deducted at fair market value. Documentation is critical. No receipt means no deduction.

Starting in tax year 2026, the first 0.5% of your AGI that you donate to charity won’t count for a tax deduction.

So if you make $100,000, the first $500 you give does nothing for your taxes — only what’s above that helps, said Jason Gakeler, CPA and certified financial planner at Accounting Resource Group in Minneapolis.

Experts like Gakeler warned against overestimating this deduction. Small donations do add up, but they rarely push someone over the standard deduction threshold on their own.

“I always tell my clients that the main goal here should be charitable intent, not necessarily tax savings,” said Gakeler.

Beginning with tax year 2026, even taxpayers who take the standard deduction can benefit from donating to charity. You can deduct up to $1,000 per person ($2,000 for married couples filing jointly) for cash donations to nonprofit charities. The tax change is one of many signed into law with the passage of the One Big Beautiful Bill Act in July 2025, including deductions for tips and overtime.

On paper, medical expenses seem like a slam-dunk deduction, but in practice, they’re hard to claim.

“Medical expenses are typically the hardest itemized deduction to benefit from,” said Gakeler.

Medical expenses are deductible only if they exceed 7.5% of your adjusted gross income. That’s a high bar, which makes this deduction tough to qualify for.

For example, if your AGI is $60,000, only medical costs above $4,500 are deductible. So if you had $7,000 in qualified medical expenses, only $2,500 would count on Schedule A.

Still, this deduction can prove valuable for families dealing with long-term care costs, so medical bills make up a significant chunk of monthly income.

“But a lot of younger people probably aren’t going to benefit from gathering up their receipts,” said Gakeler.

Learn more: Is health insurance tax-deductible? Here’s what you can claim.

A tax deduction reduces your taxable income. If you earn $60,000 and claim $10,000 in deductions, it’s like you made $50,000 in the eyes of the IRS. Deductions don’t reduce your tax bill dollar for dollar the way tax credits do — they reduce the income that gets taxed instead.

Taking the standard deduction, then layering on retirement contributions can unlock the biggest, easiest savings for most Americans. Pepper in some HSA contributions and/or student loan interest, and you can significantly reduce your taxable income.

On the other hand, if you’re itemizing, mortgage interest, SALT, and charitable contributions matter most. But remember, they only beat the standard deduction if they’re collectively high enough.

Most deductions are claimed directly on your tax return, either automatically (like payroll deductions) or by reporting them on the appropriate forms. Itemized deductions require Schedule A. Above-the-line deductions are claimed regardless of whether you itemize.