Line by Line
Search Join the waitlist
Back to Home Learn

Deductions

Does this count? What you can and can't deduct

Some expenses lower your taxable income for everyone. Some only help if you itemize. Some are brand new, and some stopped counting years ago even though people still try to claim them. Here's how to tell the difference.

Covers federal rules for the 2025 tax year, with changes starting in 2026 marked. Your state may follow different rules.
How deductions work Count for everyone New for 2025 Only if you itemize No longer deductible

How deductions actually work

1 Adjustments Taken before AGI, on Schedule 1. They help everyone and lower your AGI, which can also help you qualify for other breaks.
2 Standard or itemized You take whichever is bigger. Itemized expenses only help if, added together, they beat your standard deduction.
3 New Schedule 1-A deductions Taken after AGI. You get them whether you itemize or not, but they don't lower your AGI.
4 Credits are different A credit cuts your tax dollar for dollar. A deduction only cuts the income your tax is figured on.
"Write-off" doesn't mean free A deduction saves you roughly your tax rate times the amount. In the 12% bracket, a $1,000 deduction saves about $120 in federal income tax, not $1,000. Spending money just to get a deduction almost always costs more than it saves.

Count for everyone: adjustments to income

You can take these whether or not you itemize. They come off on Schedule 1 and lower your AGI.

Student loan interest Counts, with limits
Up to $2,500 of interest a year on qualified student loans. Phases out at higher incomes.
HSA contributions Counts, with limits
Contributions you make yourself to a health savings account, if you have a qualifying high-deductible health plan. Yearly limits apply.
Traditional IRA contributions Counts, with limits
Deductible up to the yearly limit. If you or your spouse have a retirement plan at work, the deduction phases out at higher incomes.
Educator expenses Counts, with limits
Up to $300 for 2025 ($350 for 2026) for eligible K–12 teachers and staff who buy classroom supplies. Starting in 2026, costs above that can be itemized.
Half of self-employment tax Counts
If you pay self-employment tax, half of it comes off as an adjustment.
Self-employed retirement and health insurance Counts, with limits
Contributions to SEP, SIMPLE or solo 401(k) plans, and health insurance premiums for self-employed people, within the rules for each.
Early withdrawal penalty on savings Counts
The penalty a bank charges when you cash out a CD early.
Alimony paid (older divorces) Counts, with limits
Only for divorce or separation agreements finalized before 2019. For newer agreements, alimony isn't deductible and the person receiving it doesn't report it.

New for 2025 through 2028: Schedule 1-A

These four deductions are new. You can take them whether you itemize or not, but each one shrinks as income rises past the limit shown ("MAGI" is modified adjusted gross income). They lower your federal income tax only, not Social Security or Medicare tax, and your state may not follow them.

Qualified tips New 2025–2028
Up to $25,000 of tips in jobs where tipping is customary. Reduced above $150,000 MAGI ($300,000 if married filing jointly).
Qualified overtime New 2025–2028
The extra "half" part of overtime pay required by federal law, up to $12,500 ($25,000 if married filing jointly). Same income limits as tips.
Car loan interest New 2025–2028
Up to $10,000 of interest on a loan taken out after 2024 for a new personal vehicle assembled in the U.S. Leases don't count. Reduced above $100,000 MAGI ($200,000 if married filing jointly).
Enhanced deduction for seniors New 2025–2028
Up to $6,000 per person who is 65 or older ($12,000 if both spouses qualify). Reduced above $75,000 MAGI ($150,000 if married filing jointly). Married couples must file jointly.

Married couples generally must file jointly to claim the tips, overtime and senior deductions, and you need a valid Social Security number.

Only if you itemize: Schedule A

These only lower your tax if your itemized total is bigger than your standard deduction. For 2025 the standard deduction is $15,750 for single filers and $31,500 for married couples filing jointly, so most people don't itemize.

State and local taxes (SALT) Changed for 2026
Income or sales tax plus property taxes, capped at $40,000 for 2025 ($20,000 if married filing separately). The cap rises 1% a year through 2029, then drops back to $10,000 in 2030. It shrinks for MAGI over $500,000, down to $10,000.
Mortgage interest Counts, with limits
Interest on up to $750,000 of debt used to buy, build or improve your main or second home. Home equity loan interest counts only if the money was used on the home.
Mortgage insurance premiums Starting 2026
PMI and similar premiums count as mortgage interest again starting in 2026, with income limits.
Charitable gifts Changed for 2026
Gifts to qualified charities, within percentage-of-income limits. Starting in 2026, only the part above 0.5% of your AGI counts.
Medical and dental expenses Counts, with limits
Only the part above 7.5% of your AGI. Insurance-reimbursed costs don't count.
Casualty and theft losses Counts, with limits
Generally only losses from federally declared disasters, after reductions based on your AGI.
Gambling losses Changed for 2026
Only up to your gambling winnings. Starting in 2026, only 90% of losses count.
Top-bracket limit Starting 2026
Starting in 2026, people in the 37% bracket get a smaller benefit from itemized deductions, capped at the value of a 35% deduction.

New in 2026 for people who don't itemize

Charitable gifts without itemizing Starting 2026
Starting in 2026, people who take the standard deduction can deduct up to $1,000 ($2,000 if married filing jointly) of cash gifts to qualifying charities. Gifts to donor-advised funds and most private foundations don't count.

No longer deductible (for most people)

These were cut by the 2017 tax law, and the 2025 law made most of the cuts permanent. People still ask about them every year.

Unreimbursed job expenses No longer deductible
Work clothes, tools, travel, home office and other job costs your employer didn't pay back. (Self-employed people deduct business expenses on Schedule C instead. A few groups, like Armed Forces reservists and some performing artists, have special rules.)
Tax preparation fees No longer deductible
No longer deductible for employees. A business can deduct the part of the fee for business schedules.
Investment and advisory fees No longer deductible
Fees for managing your investments, and safe deposit box rent.
Union dues and job-hunting costs No longer deductible
Part of the "miscellaneous itemized deductions" that were eliminated.
Personal exemptions No longer deductible
The old per-person deduction is gone. The bigger standard deduction and child tax credit replaced it.
Moving expenses No longer deductible
Not deductible except for active-duty military members moving under orders, and a small number of others.
Home equity interest not used on the home No longer deductible
If the loan paid for a car, college or debts, the interest doesn't count.
Personal interest No longer deductible
Credit card interest and most personal loan interest. (The new car loan deduction is the exception for qualifying vehicles.)
Everyday personal costs No longer deductible
Commuting, regular clothing, groceries, rent on your home and similar living expenses have never been deductible.

Before next year

  • Compare your itemized total to the standard deduction. If you're far below it, receipts for itemized items won't change your tax.
  • Check whether a pre-tax account at work, an HSA or an IRA could lower your AGI.
  • If you earn tips or overtime, or bought a new car with a loan, keep the records you'll need for Schedule 1-A.
  • Bring questions about limits and phase-outs to a qualified tax professional.

Sources

Last updated: November 14, 2026

This page was written from the sources below. Official sources are from the IRS or another government body; secondary sources are tax publications used to cross-check new rules. Tax law changes, so always confirm with the official source for the year you're filing.