What You Can Deduct From Your Taxes

A tax deduction reduces the amount of income the IRS counts as taxable, which lowers the tax you owe. You can deduct certain expenses and costs directly from your income before calculating what you owe — but only if those expenses fall into categories the IRS allows. The deductions available to you depend on whether you own a business, own a home, have significant medical costs, or made charitable donations.

Most people use either the standard deduction (a flat amount set by the IRS each year that applies to most filers) or itemized deductions (adding up specific expenses that may have access to). You choose whichever gives you the larger deduction. The standard deduction for 2024 is $14,600 for single filers and $29,200 for married couples filing jointly, though these amounts change yearly.

Key Takeaways

  • The standard deduction is a flat amount most people use; itemized deductions let you add up specific expenses like mortgage interest, property taxes, and charitable donations if that total is larger.
  • Mortgage interest, state and local taxes (capped at $10,000), and charitable donations are common itemized deductions for homeowners and donors.
  • Self-employed people can deduct business expenses like office supplies, equipment, vehicle mileage, and a portion of health insurance premiums.
  • Medical and dental expenses that exceed 7.5 percent of your adjusted gross income can be deducted, along with student loan interest up to $2,500.
  • You cannot deduct personal expenses like groceries, clothing, or car payments, and you must keep records or receipts to support any deduction you claim.

Itemized Deductions for Homeowners and Donors

If you own a home, you can deduct mortgage interest — the interest portion of your monthly payment, not the principal. You can also deduct property taxes paid to your state and local government. However, the IRS caps the total of state and local taxes (including property tax, income tax, and sales tax combined) at $10,000 per year, regardless of how much you actually paid.

Charitable donations to may have access to organizations — churches, nonprofits, schools, and similar groups — are deductible. You must donate to organizations the IRS recognizes as tax-exempt; donations to individuals or political campaigns do not count. Keep receipts or written acknowledgment from the charity showing the amount and date of your donation.

If your total itemized deductions (mortgage interest, property taxes, charitable donations, and other may have access to expenses) add up to more than the standard deduction, you benefit from itemizing. If not, you use the standard deduction instead.

Business and Self-Employment Deductions

If you are self-employed or own a business, you can deduct ordinary and necessary business expenses. This includes office supplies, equipment, software subscriptions, website hosting, and professional fees. You can also deduct a portion of your home if you use a dedicated space for work — the IRS allows either a simplified method ($5 per square foot, up to 300 square feet) or actual expense method based on your home's total square footage.

Vehicle mileage for business purposes is deductible at a rate set by the IRS each year (for 2024, it is 67 cents per mile for business use). Keep a log of dates, destinations, and miles driven. You can deduct health insurance premiums you pay for yourself and your family, along with contributions to a SEP-IRA or Solo 401(k) retirement plan.

Meals and entertainment have stricter rules: only 50 percent of meal expenses are deductible, and only if they are directly related to your business or occur during business travel. Home office supplies, professional development courses, and subscriptions to industry publications also may have access to.

Medical, Dental, and Education-Related Deductions

Medical and dental expenses that exceed 7.5 percent of your adjusted gross income (AGI) can be deducted. For example, if your AGI is $60,000, you can deduct medical expenses above $4,500. This includes doctor visits, prescriptions, dental work, vision care, and certain medical equipment. You cannot deduct health insurance premiums if your employer pays them, but you can deduct premiums you pay yourself if you are self-employed.

Student loan interest is deductible up to $2,500 per year if you meet income limits. For 2024, the deduction begins to phase out at $75,000 of income for single filers and $150,000 for married couples filing jointly. Tuition and fees are not deductible as a tax deduction, though education credits (which work differently) may be available.

Deductions You Cannot Claim

Personal expenses are never deductible, even if they feel necessary. You cannot deduct groceries, clothing, household utilities, car payments, gas for personal driving, or childcare costs. Commuting to work is not deductible, though business mileage is. Hobby expenses are not deductible unless the hobby generates income and you can show it is a legitimate business.

Life insurance premiums, pet expenses, and home repairs are not deductible for personal use. Fines and penalties you pay to the government are not deductible. Contributions to a regular savings account or investment account are not deductible, though contributions to certain retirement accounts (401(k), IRA, SEP-IRA) are.

How to Track and Document Your Deductions

The IRS does not require you to attach receipts to your tax return, but you must keep them for at least three years in case of an audit. For charitable donations over $250, you need written acknowledgment from the charity stating the amount and whether you received goods or services in return. For business expenses, keep invoices, receipts, credit card statements, or bank records showing what you spent and when.

A straightforward spreadsheet or folder system works: organize by category (medical, charitable, business mileage, home office) and date. For vehicle mileage, the IRS accepts a mileage log or contemporaneous written record showing the date, destination, business purpose, and miles driven. If you use accounting software or tax software, many programs have built-in tracking features that organize expenses by category automatically.

Standard Deduction Versus Itemizing

Most people use the standard deduction because it is simpler and often larger than their itemized deductions. You do not need receipts or documentation for the standard deduction — you straightforward claim it on your return. However, if you own a home with a mortgage, paid significant property taxes, made large charitable donations, or had high medical expenses, itemizing may save you more money.

To decide, add up your potential itemized deductions (mortgage interest, property taxes, charitable donations, medical expenses above 7.5 percent of AGI, and other may have access to expenses). If that total exceeds the standard deduction for your filing status, itemize. If not, use the standard deduction. You cannot claim both in the same year.

Frequently Asked Questions

Can I deduct my home office if I work from home part-time?

Yes. You can use the simplified method ($5 per square foot, up to 300 square feet) or calculate actual expenses based on your home's total square footage and the percentage of space used for work. You must use the space regularly and exclusively for work — a bedroom you use for both sleeping and work does not may have access to.

What if I do not have a receipt for a charitable donation?

For donations under $250, a bank record or written communication from the charity showing the name, date, and amount is acceptable. For donations of $250 or more, you need a written acknowledgment from the charity. Ask the organization for a receipt when you donate.

Can I deduct my car payment or car insurance?

No, car payments and insurance are not deductible for personal use. However, if you use your vehicle for business, you can deduct mileage at the IRS rate or actual business expenses (fuel, maintenance, insurance) if you track them separately from personal use.

Do I have to itemize if I own a home?

No. You can still use the standard deduction if it is larger than your itemized deductions. Compare the two: add up mortgage interest, property taxes, charitable donations, and other may have access to expenses. If that total is less than the standard deduction for your filing status, use the standard deduction instead.

What happens if I claim a deduction I am not may have access to to?

If the IRS audits your return and finds deductions you cannot support with documentation, they will disallow them and you will owe the additional tax plus interest. Penalties may explore if the IRS determines the error was intentional. Keep records for at least three years to support any deduction you claim.