The tax deductions you can claim on your federal return fall into three groups: the standard deduction (a flat amount based on filing status), above-the-line adjustments that lower your adjusted gross income whether or not you itemize, and itemized deductions you list on Schedule A instead of taking the standard deduction. Business owners and the self-employed get a separate set of deductions on Schedule C, and investors who sold at a loss get their own mechanism for capital losses. For 2026, the standard deduction alone removes $16,100 from a single filer’s taxable income and $32,200 for a married couple filing jointly.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
Standard Deduction or Itemize
Taxable income starts as gross income minus allowable deductions.2Office of the Law Revision Counsel. 26 USC 63 – Taxable Income Defined The simplest route is the standard deduction, a fixed dollar amount tied to your filing status. For 2026:1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- Single or married filing separately: $16,100
- Married filing jointly: $32,200
- Head of household: $24,150
Filers who are 65 or older or legally blind add more on top. Single and head-of-household filers add $2,050 per qualifying condition; married filers add $1,650 per qualifying individual per condition. A married couple where both spouses are over 65 adds $3,300 total.
The alternative is itemizing: tallying your actual deductible expenses on Schedule A and using that total instead. Itemizing pays off only when the total exceeds your standard deduction. Roughly 90 percent of filers stick with the standard deduction. Add up everything in the itemized section below and compare it to your standard amount. The larger number wins.
Above-the-Line Adjustments
These deductions come off your income before the standard-versus-itemize decision, so you get them either way. They also lower your adjusted gross income, which can qualify you for credits and benefits that phase out at higher incomes.
Educator Expenses
K-12 teachers, counselors, principals, and aides who work at least 900 hours during the school year can deduct up to $350 in unreimbursed classroom expenses for 2026, covering books, supplies, computer equipment, and professional development.3Office of the Law Revision Counsel. 26 USC 62 – Adjusted Gross Income Defined Two qualifying spouses can claim a combined $700.
Student Loan Interest
You can deduct up to $2,500 of interest paid on qualified education debt.4Office of the Law Revision Counsel. 26 USC 221 – Interest on Education Loans The deduction phases out at higher income. Based on recent inflation adjustments, single filers begin losing it around $85,000 to $90,000 of modified AGI, with the benefit gone about $15,000 above that. Joint filers see the phase-out begin at roughly double those amounts. Your loan servicer sends Form 1098-E with the exact figure each January.5Internal Revenue Service. Instructions for Forms 1098-E and 1098-T
Health Savings Account Contributions
If you have a high-deductible health plan, HSA contributions come off the top. For 2026, the limits are $4,400 for individual coverage and $8,750 for family coverage.6IRS.gov. Expanded Availability of Health Savings Accounts Under the One, Big, Beautiful Bill Act Contributors 55 and older add another $1,000.
Traditional IRA Contributions
Traditional IRA contributions are deductible up to $7,500 for 2026. If you or your spouse has a workplace retirement plan, the deduction phases out by income. For single filers with a workplace plan, the phase-out range is $81,000 to $91,000 of modified AGI. For married couples filing jointly where the contributing spouse has a workplace plan, it’s $129,000 to $149,000.7Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 If neither spouse has a workplace plan, the full deduction is available at any income.
Half of Self-Employment Tax
Self-employed workers pay both the employer and employee shares of Social Security and Medicare tax. The employer-equivalent half is deductible as an above-the-line adjustment. It flows automatically from Schedule SE and doesn’t require itemizing.
Itemized Deductions on Schedule A
When your actual deductible expenses beat the standard deduction, list them on Schedule A. A handful of categories drive most itemized returns.
State and Local Taxes
You can deduct state and local income taxes (or sales taxes, if you prefer) plus property taxes. From 2018 through 2025, this SALT deduction was capped at $10,000 regardless of filing status. The One, Big, Beautiful Bill Act raised the ceiling: for 2026, the cap is $40,400.8Office of the Law Revision Counsel. 26 USC 164 – Taxes Married couples filing separately get half.
High earners face a phase-down. The $40,400 cap starts shrinking once modified AGI exceeds $505,000, dropping 30 cents per dollar of income above that threshold, but it never falls below $10,000. Well above $505,000, the effective cap reverts to $10,000. The higher ceiling makes itemizing worthwhile for many more filers than in recent years, particularly in high-tax states.
Mortgage Interest
Homeowners can deduct interest on up to $750,000 of mortgage debt used to buy, build, or substantially improve a primary or secondary residence.9Office of the Law Revision Counsel. 26 USC 163 – Interest – Section: Disallowance of Deduction for Personal Interest Married filing separately splits that at $375,000 each. Mortgages taken out on or before December 15, 2017 still follow the older $1,000,000 limit. Your lender reports interest on Form 1098.10Internal Revenue Service. About Form 1098, Mortgage Interest Statement
Charitable Contributions
Donations to qualifying nonprofits are deductible if you itemize.11Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts Cash gifts to public charities can be deducted up to 60 percent of AGI. Gifts of appreciated property follow lower limits, typically 30 percent of AGI. Unused amounts carry forward for up to five years.
Documentation matters. Any single cash donation of $250 or more requires a written acknowledgment from the charity stating the amount and whether you received anything in return.11Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts If you got a dinner or event tickets, only the amount above the fair market value of what you received counts.
Medical and Dental Expenses
Unreimbursed medical costs are deductible only for the portion above 7.5 percent of your AGI.12Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses That floor is steep. If your AGI is $80,000, the first $6,000 of medical spending doesn’t count. Qualifying costs include payments to doctors and dentists, prescription medications, health insurance premiums paid with after-tax dollars, and transportation to receive care. This one mostly helps people who had an unusually expensive medical year.
Gambling Losses
If you report gambling winnings as income, you can deduct gambling losses up to the amount of your winnings, but no further; losses can’t create a net deduction against other income.13Internal Revenue Service. Five Important Tips on Gambling Income and Losses Keep receipts, tickets, or a detailed log of both wins and losses.
Deductions for the Self-Employed
If you run a business or freelance, your business expenses come off gross receipts on Schedule C before the profit reaches your personal return. Expenses must be ordinary and necessary for your line of work.14Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses “Ordinary” means common in your industry, not that you personally incur it often.
Home Office
A dedicated space used exclusively and regularly for business supports a deduction for a proportional share of rent or mortgage interest, utilities, and insurance. The IRS also offers a simplified method: $5 per square foot up to 300 square feet, capped at $1,500. The exclusive-use requirement is strict. A kitchen table that doubles as your workspace doesn’t qualify.
Vehicle and Travel
For 2026, the standard mileage rate for business driving is 72.5 cents per mile.15IRS.gov. 2026 Standard Mileage Rates You can use that rate or track actual vehicle costs, but you have to pick one method per vehicle and stick with it. Business travel away from home is also deductible, including airfare, lodging, and 50 percent of meal costs, when the primary purpose of the trip is business.
Equipment
Section 179 lets you deduct the full cost of qualifying business equipment in the year you place it in service rather than depreciating over years. For 2026, the maximum deduction is $2,560,000, phasing out once total equipment purchases exceed $4,090,000.16Internal Revenue Service. Depreciation Expense Helps Business Owners Keep More Money For most small businesses, this covers the full cost of computers, machinery, vehicles, and furniture in the year of purchase.
Qualified Business Income
Pass-through owners (sole proprietors, S corporation shareholders, partners) can deduct up to 20 percent of qualified business income under Section 199A. The One, Big, Beautiful Bill Act made this deduction permanent starting in 2026. For 2026, limits based on wages paid and property owned kick in once taxable income exceeds $201,750 for most filers or $403,500 for married filing jointly. Below those thresholds, the 20 percent deduction applies without restriction. Certain service businesses like law firms, medical practices, and consulting firms face additional restrictions at higher income levels.
Capital Losses
When you sell investments at a loss, those losses first offset any capital gains for the year. If losses exceed gains, you can deduct up to $3,000 of the excess against ordinary income ($1,500 if married filing separately).17Office of the Law Revision Counsel. 26 USC 1211 – Limitation on Capital Losses Anything left over carries forward indefinitely, keeping its short-term or long-term character.18Office of the Law Revision Counsel. 26 USC 1212 – Capital Loss Carrybacks and Carryovers A rough year in the market keeps reducing taxable income by $3,000 annually until fully used.
Records to Keep and What Happens If You Get It Wrong
The IRS generally expects records supporting any deduction for at least three years after filing.19Internal Revenue Service. How Long Should I Keep Records? Some forms arrive automatically: Form 1098 for mortgage interest,10Internal Revenue Service. About Form 1098, Mortgage Interest Statement Form 1098-E for student loan interest,5Internal Revenue Service. Instructions for Forms 1098-E and 1098-T brokerage statements for capital gains and losses. Everything else is on you. Charitable acknowledgments, medical receipts, mileage logs, and categorized expense records all need to exist before you claim the deduction, not after the IRS asks.
Getting a deduction wrong isn’t only inconvenient. The IRS imposes a 20 percent accuracy-related penalty on any underpayment stemming from negligence or disregard of the rules, and it specifically flags deductions that “seem too good to be true” as a warning sign.20Internal Revenue Service. Accuracy-Related Penalty If the underpayment traces to fraud, the penalty jumps to 75 percent of the fraudulent portion.21Office of the Law Revision Counsel. 26 U.S. Code 6663 – Imposition of Fraud Penalty Claim every deduction you’re entitled to, but skip any you can’t document. An unsupported $500 deduction isn’t worth a $100 penalty plus the tax you owe anyway, plus interest from the return’s due date.