Common deductions that lower your taxable income

A tax deduction reduces the amount of your income that the IRS taxes. When you deduct something, you subtract it from your total income before calculating what you owe. The IRS allows two main routes: you can either take the standard deduction (a flat amount that depends on your filing status) or itemize deductions (list specific expenses one by one). Most people use the standard deduction because it is simpler and often larger, but itemizing can save you more money if your deductible expenses add up to more than the standard amount.

Which deductions you can claim depends on your situation — your job, where you live, what you own, and what you spent money on during the year. This guide covers the most common ones so you understand what the IRS allows and what you will need to document.

Key Takeaways

  • The standard deduction is a fixed amount based on your filing status; most people use it instead of itemizing because it is larger and requires no record-keeping.
  • If you itemize, you can deduct mortgage interest, property taxes, state and local income taxes (up to $10,000), and charitable donations, but only if the total exceeds your standard deduction.
  • Self-employed people can deduct business expenses like supplies, equipment, home office costs, and half of their self-employment tax.
  • Student loan interest (up to $2,500 per year), educator expenses (up to $300), and medical expenses above 7.5 percent of your income are also deductible in certain situations.
  • You need receipts, invoices, or bank statements to back up any deduction you claim; the IRS can ask for proof years later.

Standard deduction versus itemizing

The standard deduction is the easiest route for most people. For the 2024 tax year, the standard deduction is $14,600 if you file as single, $29,200 if you file as married filing jointly, and $21,900 if you file as head of household. These amounts change each year. You straightforward subtract this number from your total income, and that is your taxable income. You do not need receipts or a list of expenses.

Itemizing means you add up specific deductible expenses and subtract that total instead. You itemize only if your deductible expenses are larger than the standard deduction for your filing status. For example, if you are single and your mortgage interest, property taxes, and charitable donations add up to $18,000, itemizing saves you $3,400 more than taking the standard deduction. But if they only add up to $12,000, the standard deduction is better. You will need receipts and documentation for every itemized expense.

Deductions if you itemize

Mortgage interest and property taxes are the largest deductions for many homeowners. You can deduct the interest you pay on a mortgage for a primary home or second home (up to $750,000 of the loan balance). Property taxes on your home are also deductible, but there is a limit: you can deduct no more than $10,000 in state and local taxes combined — this includes property taxes, state income tax, and local income tax. This $10,000 cap applies whether you are married filing jointly or single.

Charitable donations to may have access to organizations (churches, nonprofits, schools, and other IRS-recognized charities) are deductible. You can donate cash, clothing, household items, or vehicles. Keep receipts from the charity or a written acknowledgment if the donation is $250 or more. If you donate a car, you will need a form from the charity showing what they sold it for or what they plan to use it for.

Medical and dental expenses can be deducted, but only the amount that exceeds 7.5 percent of your adjusted gross income (AGI). For example, if your AGI is $60,000, you can only deduct medical expenses above $4,500. Covered expenses include doctor visits, prescriptions, dental work, vision care, and health insurance premiums you paid yourself. This deduction is rarely worth itemizing unless you had a major medical event.

Deductions for self-employed people

If you are self-employed, you can deduct business expenses — the costs of running your business. These include supplies, equipment, software, advertising, vehicle mileage (at the IRS standard rate, which changes yearly), and professional services like accounting or legal fees. You can also deduct a portion of your home if you use a dedicated space for work. To claim a home office deduction, measure the square footage of your workspace and divide it by your total home square footage; multiply that percentage by your rent or mortgage interest, utilities, and home maintenance costs.

Self-employed people also pay self-employment tax (Social Security and Medicare taxes), which is roughly double what an employee pays because you cover both the employee and employer portions. You can deduct half of this tax on your income tax return. If you paid $3,000 in self-employment tax, you can deduct $1,500.

To track business expenses, keep receipts, invoices, and bank statements. Many self-employed people use a spreadsheet or accounting software to organize expenses by category (supplies, mileage, equipment, and so on). The IRS can ask for documentation years after you file, so organize your records and keep them for at least three years.

Education and student loan deductions

Student loan interest is deductible up to $2,500 per year if you paid interest on a may have access to student loan during the year. This is a deduction you can take even if you do not itemize — it comes off your income before the standard deduction is applied. You do not need to itemize to claim it. Your loan servicer will send you a Form 1098-E showing how much interest you paid.

Education credits (the American Opportunity Credit and the Lifetime Learning Credit) are different from deductions — they reduce your tax bill directly rather than reducing your taxable income. You cannot claim both a credit and a deduction for the same education expense in the same year, so you will need to figure out which saves you more money. The American Opportunity Credit covers up to $2,500 of tuition and fees for the first four years of college; the Lifetime Learning Credit covers up to $2,000 of tuition and fees for any level of education.

Educator expenses — if you are a K–12 teacher, you can deduct up to $300 of supplies, books, and equipment you bought for your classroom out of your own pocket. You do not need to itemize to claim this deduction.

Deductions you might not know about

Alimony payments (if you are the one paying) are deductible if the divorce or separation agreement was finalized before January 1, 2019. Child support is never deductible. If your agreement was finalized after that date, alimony is not deductible.

Gambling losses can be deducted, but only up to the amount of gambling winnings you reported. You need to keep detailed records of when and where you gambled and how much you won or lost. This deduction requires itemizing.

Investment losses can offset investment gains. If you sold stocks or other investments at a loss, you can use those losses to reduce capital gains from other investments. If your losses exceed your gains, you can deduct up to $3,000 of the excess loss against other income in that year, and carry forward any remaining losses to future years.

Unreimbursed employee expenses are generally not deductible anymore under current tax law, with rare exceptions. If your employer requires you to buy tools or uniforms and does not reimburse you, you typically cannot deduct those costs.

What you cannot deduct

The IRS does not allow deductions for personal expenses, even if they feel necessary. You cannot deduct groceries, gas for your personal car, rent or mortgage on your primary home (unless you run a business from it), car insurance, health insurance premiums you paid with pre-tax money through your employer, or clothing. Meals and entertainment are generally not deductible unless they are a direct business expense and you can document the business purpose.

Fines and penalties — including traffic tickets, parking tickets, and penalties for breaking the law — are not deductible. Tuition for your children's K–12 education is not deductible, though some states offer education savings accounts or tax credits for private school tuition.

Keeping records and documentation

The IRS does not require you to send receipts with your tax return, but you must keep them in case you are audited. Keep receipts, invoices, bank statements, and charity acknowledgment letters for at least three years — longer if you claim a deduction for a major purchase like a home or investment. Organize them by category (medical, charitable, business, and so on) so you can find them quickly.

For charitable donations, keep the receipt from the charity or a written acknowledgment. For medical expenses, keep bills and receipts from doctors, pharmacies, and hospitals. For business expenses, keep invoices and receipts showing what you bought, when, and how much you paid. If you claim mileage, keep a log showing the date, destination, business purpose, and miles driven.

If you use tax software or work with a tax professional, they will ask you for this documentation. Having it organized before you file makes the process faster and ensures you do not miss any deductions you are may have access to to claim.

Frequently Asked Questions

Should I itemize or take the standard deduction?

Take the standard deduction unless your itemized deductions add up to more than the standard deduction for your filing status. For 2024, that is $14,600 for single filers and $29,200 for married filing jointly. Add up your mortgage interest, property taxes (capped at $10,000), charitable donations, and medical expenses above 7.5 percent of your income. If the total is higher, itemize. If not, take the standard deduction.

Can I deduct my home office if I work from home?

Yes, but only if you use a dedicated space in your home exclusively for work. Measure the square footage of that space and divide it by your total home square footage. Multiply that percentage by your mortgage interest (or rent), utilities, insurance, and maintenance costs. You can deduct that portion. Keep receipts for utilities and repairs. If you use a room for both work and personal use, you cannot deduct it.

What happens if I claim a deduction and do not have a receipt?

The IRS can ask for proof of any deduction you claim, even years later. Without a receipt, you cannot prove the expense happened or how much it cost. For charitable donations over $250, you need a written acknowledgment from the charity. For other expenses, keep receipts, bank statements, or credit card statements showing the purchase.

Can I deduct my car payment or car insurance?

No, unless you use the car for business. If you drive for work (not commuting to a job), you can deduct mileage at the IRS standard rate or actual expenses like gas, insurance, and maintenance. Keep a log of business miles driven. If you use the car partly for business and partly for personal use, you can only deduct the business portion.

Do I need to report deductions on my tax return?

If you take the standard deduction, you do not list anything — you just claim the standard deduction amount. If you itemize, you list deductions on Schedule A and attach it to your return. Tax software will ask you questions and fill out the forms for you. If you work with a tax professional, they will handle this.