Tax Deductions: Updated for 2026 Tax Season

Before diving into specific deductions, it is important to understand what tax deductions are. A tax deduction reduces your taxable income, which can lower the amount of tax you owe. Deductions generally fall into two main categories: standard deductions and itemized deductions.

Standard Deduction

The standard deduction is a fixed dollar amount that reduces your taxable income. For 2025 tax returns filed in 2026, the standard deduction amounts are:

Single: $15,750

Married Filing Jointly: $31,500

Married Filing Separately: $15,750

Head of Household: $23,625 

For 2026 tax returns filed in 2027, the standard deduction amounts increase to:

Single: $16,100

Married Filing Jointly: $32,200

Married Filing Separately: $16,100

Head of Household: $24,150 

Itemized Deductions

Itemized deductions are specific expenses you may be able to deduct instead of taking the standard deduction. You generally itemize only when your total itemized deductions are higher than your standard deduction.

Understanding the difference between the standard deduction and itemized deductions is important because it can make a major difference in your tax return.

Top Tax Deductions for Individuals

1. Medical and Dental Expenses

If you have significant medical or dental expenses, you may be able to deduct part of those costs if you itemize deductions. For 2025 returns, medical and dental expenses are deductible only to the extent they exceed 7.5% of your adjusted gross income.

Example: If your AGI is $50,000 and your qualified medical expenses are $5,000, the first $3,750 does not count because that is 7.5% of your AGI. You may be able to deduct $1,250 if you itemize. For 2025, medical mileage is 21 cents per mile.

2. State and Local Taxes

State and local taxes can include state income taxes or sales taxes, along with real estate taxes and certain personal property taxes. For 2025, the state and local tax deduction limit is generally $40,000, with phaseout rules for higher-income taxpayers. This is a major change from the old $10,000 cap.

Example: If you paid $6,000 in state income taxes and $5,000 in property taxes, your total state and local taxes would be $11,000. Under the updated 2025 rules, that amount may be deductible if you itemize, depending on your income and overall tax situation.

3. Mortgage Interest

If you own a home and have a mortgage, you may be able to deduct mortgage interest if you itemize deductions. For many newer mortgages, the deduction generally applies to mortgage debt up to $750,000.

Example: If you paid $15,000 in qualified mortgage interest during the year, that amount may be deductible if you itemize.

4. Charitable Contributions

Donations made to qualified charitable organizations may be deductible if you itemize. This can include cash donations as well as the fair market value of donated goods.

Example: If you donated $1,000 in cash and $500 worth of clothing to a qualified charity, you may be able to deduct $1,500 if you have proper records and itemize deductions. For 2025, charitable mileage remains 14 cents per mile.

5. Education Expenses

Education tax benefits are not always deductions. In many cases, they are credits, which can be even more valuable because credits reduce your tax directly.

The American Opportunity Tax Credit may be worth up to $2,500 per eligible student for qualified education expenses. The Lifetime Learning Credit may also help with eligible higher education costs.

Example: If you paid $4,000 in qualified tuition and expenses for an eligible student, you may qualify for up to $2,500 through the American Opportunity Tax Credit.

Top Tax Deductions for Businesses

1. Business Expenses

If you run a business, you may be able to deduct ordinary and necessary expenses related to operating that business. This may include supplies, advertising, rent, utilities, software, postage, professional fees, and other business-related costs.

Example: If you spent $10,000 on supplies and $5,000 on rent, those expenses may reduce your taxable business income.

2. Home Office Deduction

If you are self-employed and use part of your home regularly and exclusively for business, you may qualify for a home office deduction. This can be figured using actual expenses or the simplified method.

Example: If your home office takes up 10% of your home and qualifies under the rules, you may be able to deduct 10% of certain home expenses.

3. Vehicle Expenses

If you use your vehicle for business purposes, you may be able to deduct vehicle expenses. You can generally choose between the standard mileage rate or actual expenses, depending on your situation.

For 2025, the standard business mileage rate is 70 cents per mile. For 2026, the business mileage rate increases to 72.5 cents per mile. (IRS)

Example for 2025: If you drove 5,000 business miles, the deduction using the standard mileage rate would be: 5,000 × $0.70 = $3,500

4. Retirement Contributions

Retirement contributions can reduce taxable income while helping you save for the future.

For 2025, the IRA contribution limit is generally $7,000, or $8,000 if you are age 50 or older. For 2026, the IRA limit increases to $7,500, or $8,600 if you are age 50 or older. (AP News)

Example: If you qualify and contribute $7,000 to a deductible traditional IRA for 2025, that contribution may reduce your taxable income.

5. Health Insurance Premiums

If you are self-employed, you may be able to deduct health insurance premiums paid for yourself, your spouse, and your dependents. This deduction is generally taken above the line, which means it may reduce your adjusted gross income even if you do not itemize.

Example: If you paid $5,000 in qualifying self-employed health insurance premiums, that amount may reduce your taxable income.

Additional Deductions to Consider

1. Student Loan Interest

If you paid interest on qualified student loans, you may be able to deduct up to $2,500 of student loan interest. This deduction may be available even if you do not itemize.

2. Moving Expenses for Active Duty Military

Most taxpayers can no longer deduct moving expenses. However, active duty members of the Armed Forces may still qualify if the move is due to a permanent change of station.

For 2025, the moving mileage rate for eligible military moves is 21 cents per mile. For 2026, it is 20.5 cents per mile. (IRS)

3. Casualty and Theft Losses

Casualty and theft losses are limited under current law. In many cases, the loss must be connected to a federally declared disaster to qualify. These rules can be complicated, so this is an area where taxpayers should be careful before assuming a loss is deductible.

Tips for Maximizing Your Deductions

Keep Accurate Records

Good records are one of the most important parts of claiming deductions. Keep receipts, mileage logs, tax forms, bank statements, donation acknowledgments, and any documents that support your deductions.

Compare Standard vs. Itemized Deductions

Many taxpayers take the standard deduction because it is higher than their itemized deductions. However, if you have mortgage interest, property taxes, charitable donations, or large medical expenses, itemizing may be worth reviewing.

Do Not Guess

Tax deductions depend on facts, records, income levels, filing status, and IRS rules. Guessing can lead to missed deductions or problems later.

Work With a Tax Professional

A tax professional can help identify deductions you may have missed, explain which deductions apply to your situation, and help make sure your return is filed correctly.

Conclusion

Claiming the right tax deductions can make a big difference on your tax return. Whether you take the standard deduction or itemize, the goal is to make sure your return is accurate and that you are not missing deductions or credits you are allowed to claim.

Tax laws and deduction amounts change over time, so it is important to use current numbers and not rely on outdated information. For the 2026 filing season, the standard deduction, mileage rates, education credits, retirement contribution limits, and itemized deduction rules should all be reviewed carefully.

At Gregg The Tax Guy, my goal is to help make tax filing easier to understand, less stressful, and more accurate. Getting the deductions right can help you avoid mistakes, reduce your taxable income, and keep more of your money where it belongs.