The Best Tax Deductions and Tax Breaks for 2025-2026

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Tax deductions and tax breaks in 2025-2026 can still meaningfully reduce how much you owe the IRS. The biggest opportunities come from the standard deduction, credits for children and dependents, education-related tax breaks, retirement contributions, self-employment expenses, and energy-efficient home improvements.

Depending on your income and life situation, these deductions and credits can lower your taxable income or directly reduce your tax bill — in some cases by several thousand dollars.

The Best Tax Deductions and Breaks for 2025-2026

The tax code is long, complicated, and always evolving, which is why many people choose to work with a tax professional to make sure they’re not missing anything. That said, some tax deductions and credits apply to a wide range of filers and tend to deliver the biggest savings. The ones below are among the most common — and most likely — to help lower your tax bill.

Health And Medical Deductions

Health-related tax breaks can help offset some of the most expensive and unpredictable costs many households face. Depending on your situation, you may be able to deduct certain medical expenses, health insurance premiums, or contributions to a health savings account — all of which can lower your taxable income.

Medical And Dental Expenses

You can deduct qualified medical and dental expenses you paid for yourself, your spouse, and your dependents. This includes out-of-pocket costs such as doctor visits, prescriptions, dental care, and certain medical equipment.

Some home improvements made for medical reasons may also qualify. For example, installing wheelchair ramps, widening doorways, or lowering cabinets to improve accessibility can count as medical expenses.

Only the portion of your total medical expenses that exceeds 7.5% of your adjusted gross income (AGI) is deductible.

Self-Employed Health Insurance

If you’re self-employed and have a net profit, you may be able to deduct health and long-term care insurance premiums without itemizing. This deduction is claimed using Form 7206 and can include coverage for yourself, your spouse, your dependents, and your children — even if they are not claimed as dependents.

If you don’t deduct 100% of your eligible premiums this way, the remaining amount may be added to your itemized medical expense deduction.

Keep in mind that being self-employed also means you’re responsible for the full FICA tax rate, which covers Social Security and Medicare.

Health Savings Account Contributions

Health savings accounts (HSAs) are tax-advantaged accounts you can use to pay or reimburse qualified medical expenses if you’re enrolled in a high-deductible health plan.

In 2026, you can contribute up to $4,400 for self-only coverage or $8,750 for family coverage. You can deduct contributions you make — or that someone other than your employer makes — to your account. If you’re age 55 or older, you can contribute an additional $1,000 as a catch-up contribution.

Homeowner And Property Deductions

Homeownership can come with meaningful tax advantages, especially if you itemize or recently sold a home. From mortgage-related deductions to capital gains exclusions, these tax breaks can help offset some of the largest costs tied to owning and selling property.

Homeowner Tax Deductions

If you itemize your deductions, you may be able to deduct interest paid on a mortgage of up to $750,000 for most filers, or $375,000 if you’re married filing separately.

You may also be able to deduct mortgage points — prepaid interest paid at closing — as long as they meet IRS requirements. In addition, private mortgage insurance (PMI) premiums are deductible as of 2026, providing extra relief for homeowners with smaller down payments.

Home Sale

If you sold your primary residence at a profit, you may be able to exclude a significant portion of those gains from your taxable income. Single filers can exclude up to $250,000, while married couples filing jointly can exclude up to $500,000.

To qualify, the home generally must have been your primary residence for at least two of the five years before the sale.

Retirement And Investment Deductions

Saving and investing for the future can also come with tax advantages. Depending on the accounts you use and how you invest, certain contributions and interest expenses may be deductible, helping lower your taxable income while you build long-term wealth.

IRA Or 401(k) Contributions

While after-tax contributions to Roth accounts aren’t deductible, you may be able to deduct contributions made to a traditional IRA or a 401(k) plan, depending on your income and eligibility.

For 2026, the 401(k) contribution limit is $24,500, up from $23,500 in 2025. The IRA contribution limit is $7,500, up from $7,000.

If you’re age 50 or older, you can make additional “catch-up” contributions of up to $8,000 to a 401(k) and $1,100 to an IRA, allowing you to save — and potentially deduct — more as retirement approaches.

Investment Interest Expense

You may also be able to deduct investment interest expense, which is the interest paid on money borrowed to purchase taxable investments.

This deduction is limited to the amount of your net taxable investment income for the year, so it generally benefits investors who earn interest, dividends, or capital gains from those investments.

Education And Work-Related Deductions

Education costs and work-related expenses can add up quickly, but several tax breaks are designed to help offset them. From student loan interest to education credits and certain business expenses, these deductions and credits can reduce what you owe — or increase your refund — if you qualify.

Student Loan Interest

You may be able to deduct qualified student loan interest you paid during the tax year. The deduction is capped at the lesser of $2,500 or the amount you actually paid.

This deduction isn’t available if you’re married filing separately, or if you or your spouse are claimed as a dependent on someone else’s tax return.

Educational Expenses

The American Opportunity Tax Credit allows you to claim up to $2,500 per student for qualified postsecondary education expenses, for up to four years. Part of the credit is refundable, meaning you can receive up to 40% of the credit — or $1,000 — as a refund if the credit reduces your tax liability to zero.

The Lifetime Learning Credit reduces your tax liability by 20% of the first $10,000 in qualified education expenses, up to a $2,000 maximum per year. This credit can be used for undergraduate, graduate, or job-related coursework.

Work-Related Meals And Gifts

The IRS allows a 50% deduction for the cost of qualified business meals and up to 100% of the cost of qualified business social events, such as company parties.

Business gift deductions are limited to $25 per recipient per tax year, regardless of the number of gifts given.

Business And Self-Employed Deductions

Running your own business or working for yourself comes with added tax responsibilities — but it also opens the door to valuable deductions. Many everyday costs tied to operating your business can be written off, helping lower your taxable income when you qualify.

Home Office Deduction

The home office deduction is available only to self-employed individuals, not remote W-2 employees.

To qualify, the space must be used exclusively and regularly for business and serve as your principal place of work. If you meet these requirements, you may also be able to deduct related expenses, such as business mileage. Keep in mind that regular commuting between home and work doesn’t count as a deductible expense.

Business Travel Expenses

Self-employed individuals can deduct necessary and reasonable business travel expenses, including transportation, lodging, and meals.

To qualify, the travel must be primarily for business purposes. Personal or lavish expenses aren’t deductible. These costs are typically claimed on Schedule C when you file your tax return.

Car For Business Use

If you use your vehicle for business, you may be able to deduct those costs. You can choose between the standard mileage rate or the actual expense method, which deducts the portion of your car’s operating costs that relate to business use.

Whichever method you choose, keeping clear mileage logs and expense records is essential.

Standard And Other Key Deductions

Some of the most valuable tax breaks don’t require special expenses or complex planning. From the standard deduction to refundable credits and limits on common write-offs, these provisions apply to a wide range of filers and can have a big impact on your final tax bill.

Standard Tax Deduction

The standard deduction reduces your taxable income dollar for dollar, and most taxpayers are eligible to claim it instead of itemizing.

For tax year 2026, the standard deduction amounts are:

• Single filers: $16,100
• Married couples filing jointly: $32,200
• Heads of household: $24,150

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a refundable credit for low- to moderate-income workers. Because it’s refundable, you may receive money back even if you don’t owe federal income tax.

For 2026, single filers earning up to $62,974 or married couples filing jointly with income under $70,224 may qualify for up to $8,231, depending on the number of qualifying children.

Charitable Cash Contributions

You can generally deduct cash donations to qualified charities up to 60% of your adjusted gross income (AGI). Several important changes apply beginning in 2026:

• A $1,000 non-itemizer deduction for qualified charitable donations for filers who take the standard deduction
• Only donations that exceed 0.5% of your AGI qualify for a deduction
• High-income filers in the top tax bracket are limited to 35% of the value of all itemized deductions, including charitable contributions

State And Local Tax Deduction

As of 2025 and through tax year 2029, you can deduct up to $40,000 in state and local taxes (SALT), including income, sales, and property taxes. The deduction begins to phase out for incomes over $500,000.

One important limitation applies: you must choose between deducting state income tax or state sales tax, not both.

Miscellaneous Deductions

Some tax deductions don’t fit neatly into the major categories but can still make a difference if they apply to you. These are less common, but worth knowing about if you’ve had an unusual year.

• Jury Duty Pay. If you receive jury duty pay but are required to turn it over to your employer, you can deduct the amount you gave up so you’re not taxed on income you didn’t keep.
• Gambling Losses. Gambling losses are deductible up to the amount of your gambling winnings, as long as you have proper documentation. You can’t deduct losses that exceed what you won.
• Military Reservist Travel Expenses. Qualified reservists may deduct unreimbursed travel expenses for duty-related travel of 100 miles or more from home. This can include transportation, lodging, and meals.
• Disaster Losses. Casualty and disaster losses are deductible only if they result from a federally declared disaster. The deduction is limited to the lesser of your property’s adjusted basis or the decrease in its fair market value after the event.

Final Take

No two tax situations look exactly the same, but most people qualify for at least a few meaningful tax breaks — whether that’s the standard deduction or credits like the Child Tax Credit. The biggest savings often come from knowing what applies to you and staying organized throughout the year.

To put yourself in the best position at tax time, focus on a few simple habits:

• Keep track of expenses as you go, especially those tied to work, health care, education, or charitable giving.
• Stay aware of current IRS rules, since deduction limits and eligibility can change from year to year.
• Get help when you need it, whether that’s a CPA or reliable tax software, to make sure you’re claiming every deduction and credit you qualify for.

A little preparation can go a long way toward lowering your tax bill — and avoiding surprises when you file.

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