12 Tax Deductions You Might Be Missing

The average taxpayer overpays by hundreds of dollars every year simply by missing deductions they're entitled to. Here are 12 commonly overlooked deductions that could put money back in your pocket.

Above-the-Line Deductions

These reduce your adjusted gross income (AGI) regardless of whether you itemize.

1. Student Loan Interest — Up to $2,500/year

Deduct interest paid on qualified student loans, even if your parents pay them. Phases out at higher incomes ($75,000-$90,000 single). Your loan servicer sends Form 1098-E.

2. Educator Expenses — Up to $300/year

Teachers who work at least 900 hours in K-12 can deduct unreimbursed classroom supplies: books, computer equipment, supplies, and professional development courses.

3. HSA Contributions — Up to $4,150 (single) or $8,300 (family)

Contributions to a Health Savings Account are fully deductible. Money grows tax-free and withdrawals for medical expenses are tax-free. Triple tax-advantaged.

4. Self-Employment Tax Deduction — 7.65% of SE income

Self-employed individuals pay both employee and employer portions of FICA (15.3%). You can deduct the employer half (7.65%) from your income.

5. Traditional IRA Contributions — Up to $7,000 ($8,000 if 50+)

If you're not covered by a workplace retirement plan (or income is below limits), you can deduct IRA contributions.

Itemized Deductions

These only help if your total itemized deductions exceed the standard deduction.

6. State & Local Taxes (SALT) — Up to $10,000

Deduct state income taxes (or sales tax if no state income tax), plus property taxes. Keep receipts for large purchases if claiming sales tax.

7. Mortgage Interest — On up to $750,000 of debt

Deduct interest on your primary home and one second home. Your lender sends Form 1098. Home equity loan interest is also deductible if used to buy, build, or improve the home.

8. Charitable Donations — Up to 60% of AGI

Cash and property donations to qualified charities are deductible. Don't forget non-cash donations like clothing and furniture. Get receipts for donations over $250.

9. Medical Expenses — Exceeding 7.5% of AGI

Deduct unreimbursed medical expenses that exceed 7.5% of your AGI. Includes insurance premiums, dental, vision, prescriptions, therapy, and even medical travel.

Self-Employed & Side Hustle Deductions

10. Home Office Deduction — $5/sq ft up to 300 sq ft

If you use part of your home regularly and exclusively for business, deduct it. Simplified method: $5 per square foot (up to $1,500). Actual expense method may yield more.

11. Business Expenses — Fully deductible

Deduct ordinary and necessary business expenses: software, equipment, professional development, business travel, client meals (50%), marketing, and professional services.

12. Qualified Business Income (QBI) — Up to 20%

Pass-through business owners (sole proprietors, LLCs, S-corps) can deduct up to 20% of their qualified business income. One of the most valuable deductions for self-employed individuals.

Tax Credits vs. Deductions

How to Maximize Your Deductions

• Keep Detailed Records: Save receipts and use expense tracking apps
• Bunch Deductions: If close to the standard deduction, combine two years of charitable giving into one
• Max Out Tax-Advantaged Accounts: 401(k), IRA, and HSA contributions reduce taxable income
• Review Last Year's Return: Look for deductions you may have missed

This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional for advice specific to your situation.

Frequently Asked Questions