What Expenses Are Tax Deductible?

Last Updated on August 16, 2026 by Amrita Das

Tax-deductible expenses reduce your taxable income, which lowers the amount of tax you owe. Common deductions include mortgage interest, student loan interest, charitable donations, retirement contributions, and medical expenses exceeding 7.5% of your adjusted gross income.

Some deductions require itemizing; others can be claimed alongside the standard deduction.

Most Americans leave money on the table at tax time—not because they’re careless, but because the tax code is genuinely complicated. According to H&R Block, 1 in 5 eligible taxpayers miss out on an average $2,700 credit or deduction each year.

That’s a significant sum, especially when the fix is simply knowing what you’re entitled to claim.

Tax deductions work by reducing your taxable income. The lower your taxable income, the lower your tax bill. A deduction isn’t the same as a tax credit—a credit cuts your tax bill dollar for dollar, while a deduction reduces the income that gets taxed.

Still, deductions add up fast, and understanding which ones apply to your situation can make a real difference when April rolls around.

In this post, you will learn the most common tax-deductible expenses for the coming tax year, explains the difference between standard and itemized deductions, and highlights several new deductions introduced under the One Big Beautiful Bill Act (OBBBA) that you may not have heard about yet.

Table of Contents

What Does “Tax Deductible” Actually Mean?

A tax-deductible expense is one you can subtract from your gross income before your taxes are calculated. According to the IRS, this reduces your adjusted gross income (AGI)—and a lower AGI means a smaller tax bill.

There are two main types of deductions:

Above-the-line deductions reduce your gross income to arrive at your AGI. You can claim these whether you itemize or take the standard deduction.
Below-the-line deductions are subtracted after your AGI is calculated. Itemized deductions (like mortgage interest and charitable contributions) fall into this category. Some newer deductions, introduced by the OBBBA, are also below-the-line but available to both itemizers and non-itemizers.

Understanding which category a deduction falls into is key—because it determines whether you can claim it alongside the standard deduction or whether you’ll need to itemize.

Standard Deduction vs. Itemized Deductions: Which Should You Choose?

Before diving into specific deductions, it’s worth knowing your baseline. The standard deduction is a flat dollar amount that reduces your taxable income without requiring you to track individual expenses. For the 2026 tax year, the standard deduction amounts are:

$16,100 for single filers and married filing separately
$24,150 for heads of household
$32,200 for married filing jointly or qualifying surviving spouse

Itemizing, on the other hand, means listing every eligible expense on Schedule A of your tax return. It’s more work, but it can pay off significantly if your deductible expenses exceed your standard deduction amount. According to the IRS, roughly 90% of taxpayers take the standard deduction—but that doesn’t mean itemizing is never worth it.

If you own a home, make large charitable contributions, or have high out-of-pocket medical costs, itemizing may result in a lower tax bill. Running your return both ways—or asking a tax professional to do it—is always a smart move.

Common Tax-Deductible Expenses You Should Know About

Student Loan Interest Deduction

Paying off student loans is hard enough without the added tax burden. The good news: you can deduct up to $2,500 of the interest you paid on student loans in 2026. This is an above-the-line deduction, so you don’t need to itemize to claim it.

Eligibility is based on income—the deduction phases out at higher income levels—and you must be legally responsible for the loan. Even if someone else made the payments, you can still claim the deduction if the debt is in your name.

Mortgage Interest Deduction

Homeowners who itemize can deduct the interest paid on their mortgage. This deduction applies to mortgages used to buy, build, or substantially improve your primary or secondary residence.

There are loan limits to keep in mind:

Up to $750,000 for mortgages taken out after December 15, 2017
Up to $1,000,000 for mortgages taken out on or before December 15, 2017

For 2026 and beyond, private mortgage insurance (PMI) will once again be deductible, thanks to the OBBBA.

State and Local Taxes (SALT) Deduction

The SALT deduction allows itemizers to deduct a combination of state and local income taxes (or sales taxes) and property taxes on their federal return. For the 2025 tax year, the SALT deduction is capped at $40,400 ($20,200 for married filing separately).

Note: You can deduct state income taxes or sales taxes—but not both. For most people, deducting income taxes saves more, though if you made a significant purchase during the year (like a car), the sales tax deduction might edge ahead.

Charitable Donation Deduction

Donations to qualifying organizations—churches, nonprofits, schools, and other tax-exempt entities—are deductible if you itemize. Cash contributions are generally deductible up to 60% of your AGI.

Non-cash donations like clothing and household goods are deductible at fair market value. Volunteer drivers can deduct 14 cents per mile driven in service of a charity, plus tolls and parking.

Starting in 2026, the OBBBA introduces an above-the-line charitable deduction of up to $1,000 ($2,000 for joint filers) for cash donations—meaning even taxpayers who take the standard deduction can benefit.

Medical and Dental Expense Deduction

Medical costs are only deductible if they exceed 7.5% of your AGI and you itemize. That’s a high bar, but for those facing major illness, surgery, or ongoing treatment, it can result in meaningful savings.

For example, if your AGI is $80,000, only medical expenses above $6,000 (7.5% of $80,000) are deductible. So if you paid $10,000 in qualified medical costs, you could deduct $4,000. Dental bills, vision expenses, prescription medications, and certain long-term care costs all qualify.

Health Savings Account (HSA) Deduction

Contributions to a Health Savings Account are deductible above the line, meaning they reduce your AGI regardless of whether you itemize. For 2025, the contribution limits are:

$4,400 for self-only coverage under a high-deductible health plan (HDHP)
$8,750 for family coverage under an HDHP

If you’re 55 or older, you can contribute an additional $1,000. Not only do HSA contributions reduce your taxable income, but the money grows tax-free and withdrawals for qualified medical expenses are also tax-free.

IRA Contributions Deduction

Contributing to a traditional IRA can reduce your taxable income by up to $7,500 for the 2026 tax year ($8,600 if you’re 50 or older). This is an above-the-line deduction, so no itemizing required.

However, if you or your spouse are covered by a workplace retirement plan, the deductibility phases out at higher income levels. Note that Roth IRA contributions are not deductible.

Home Office Deduction

Self-employed individuals who use part of their home exclusively and regularly for business may deduct home office expenses. The deduction can be calculated two ways:

Simplified method: $5 per square foot of your home office, up to 300 square feet (maximum deduction of $1,500)
Actual expense method: A percentage of your total home costs—utilities, rent, insurance, repairs—based on the share of your home used for business

Remote employees cannot claim this deduction. It’s available only to those who are self-employed.

Business Expenses for the Self-Employed

Freelancers, contractors, and small business owners can deduct a wide range of ordinary and necessary business expenses, including:

Advertising and marketing costs
Office supplies and equipment
Business travel and transportation
Professional and legal services
Business insurance premiums

These deductions are reported on Schedule C and don’t require itemizing.

Educator Expense Deduction

K-12 teachers who spend their own money on classroom supplies can deduct up to $350 for the 2026 tax year. If both spouses are eligible educators and file jointly, the combined deduction can reach $700. This is an above-the-line deduction, so it’s available to all educators regardless of whether they itemize.