Tax write-offs, or more commonly described as tax deductions, will lower your taxable income. By subtracting the deductible expenses, you decrease your taxable income and thus reduce your tax liability.
Generally, the two ways to claim your tax deductions are the standard deduction or itemized deductions, of which you can only choose one. The standard deduction is essentially a flat-dollar reduction to your adjusted gross income (AGI). The Tax Cuts and Jobs Act (TCJA) of 2017 nearly doubled the standard deduction but it also eliminated or restricted many itemized deductions through 2025, which caused most taxpayers to choose the standard deduction. However, for those that have deductions that exceed the standard deduction, it may be beneficial to itemize so that you can save money. Keep in mind that this requires more forms as well as proof that you’re entitled to those deductions.
Mortgage Interest – Homeowners can deduct mortgage interest on their primary residence and a second home, however the TCJA limited the deduction on the first $750,000 of mortgage debt. There’s no longer a deduction for interest paid on home equity loans unless the debt is used to buy, build, or substantially improve your home that secures the loan.
Small Business Owners
- Qualified Business Income (QBI)
- Home office / Rent
- Health & Business insurance
- Continuing education
- Auto expenses
- Retirement savings
- Self-employment taxes
- Office supplies
- Phone & Internet
- Business travel and meals
- Advertising & Marketing
- Certain memberships
Medical expenses – Qualified medical expenses that exceed 7.5% of your AGI and were not reimbursed by your employer or insurance company.
State and local taxes (SALT) – Up to $10,000 may be deducted for married filing jointly (MFJ) that is any combination of property taxes and either state and local income taxes or sales taxes.
Charitable contributions – Cash or property can be deducted, generally up to 60% of your adjusted gross income. For high income earners, a Donor-Advised Fund (DAF) could be a good option as it allows you to bunch charitable deductions that you typically take each year into one year to take advantage of a larger tax break.
Health Savings Account (HSA) – Contributions as well as withdrawals are tax-free as long as they are used for qualified medical expenses.
Traditional IRA contributions – You may be able to deduct contributions to a traditional IRA, although that will be dependent upon whether you or your spouse is covered by an employer retirement plan as well as your total income.
Student loan interest – You may deduct up to $2500 on student loan interest paid.
Besides tax deductions, there are many tax credits that may be available to you. A tax credit is different than a tax deduction in that it is a dollar-for-dollar reduction to your actual tax bill, and a few of them are refundable. Here’s some of the available tax credits, most of which are based upon your income and number of dependents.
- Child tax credit
- Child and Dependent Care tax credit
- American Opportunity tax credit
- Lifetime learning credit
- Child Adoption credit
- Earned Income tax credit
- Saver’s credit
- Residential Energy credit
- Electric Vehicle tax credit