15 Tax Deductions You Might Be Overlooking in 2025

Tax season can be stressful, but it’s also an opportunity to ensure you’re getting the most out of your return. Many taxpayers miss out on deductions simply because they aren’t aware of them. Here are 15 tax deductions you might be overlooking that could help you keep more of your hard-earned money.

1. Home Office Deduction

If you work from home, even part-time, you may qualify for the home office deduction. This applies to self-employed individuals or those who operate small businesses from their residence. The deduction covers a portion of your rent, utilities, internet, and maintenance costs based on the size of your office space compared to your home.

Pro Tip:

Keep detailed records of expenses to ensure accuracy when calculating this deduction. Use the IRS’s simplified option if measuring exact expenses feels daunting.

2. Student Loan Interest

You can deduct up to $2,500 in student loan interest paid during the year, even if you don’t itemize your deductions. This deduction is especially beneficial for recent graduates managing student debt.

Eligibility:

Your income must fall within the IRS’s specified limits to claim this deduction.

3. Medical and Dental Expenses

If your out-of-pocket medical and dental expenses exceed 7.5% of your adjusted gross income (AGI), you can deduct the excess amount. This includes costs for prescriptions, doctor visits, surgeries, and even mileage driven for medical appointments.

Often Missed:

Many forget to include expenses for glasses, hearing aids, or other medically necessary equipment.

4. Charitable Contributions

Donations to qualified charities can be deducted, including cash, goods, or even mileage driven to volunteer. Additionally, you may deduct out-of-pocket expenses for volunteer work, like supplies purchased for a school fundraiser.

Don’t Forget:

Ensure you have proper documentation, such as receipts or written acknowledgment from the charity.

5. Educator Expenses

Teachers and eligible educators can deduct up to $300 for classroom supplies they purchase out-of-pocket. This deduction helps offset the costs of materials like books, stationery, and educational software.

Tip:

Keep all receipts for school-related purchases to back up your claim.

6. State Sales Tax

If your state doesn’t have an income tax, you can deduct the sales tax you paid throughout the year. This is especially helpful for those who made large purchases, such as a car or major appliances.

Online Purchases:

Don’t forget to include the sales tax for big-ticket items bought online.

7. Job Search Expenses

Expenses related to searching for a new job in your current field may be deductible. This includes costs for resume preparation, travel, and career counseling.

Important Note:

These deductions are only applicable if you’re itemizing and meet specific IRS criteria.

8. Moving Expenses for Active-Duty Military

Active-duty military members relocating due to a change in station can deduct moving expenses. This includes costs for transporting household goods and travel expenses for you and your family.

Exemption:

This deduction isn’t available to non-military taxpayers due to changes in the tax law.

9. Self-Employment Expenses

Freelancers and self-employed individuals can deduct numerous expenses, such as business-related travel, marketing costs, and professional memberships. Additionally, you can deduct half of your self-employment tax.

Popular Deduction:

Don’t forget about the cost of your business phone line or any software subscriptions you use for work.

10. Energy-Efficient Home Improvements

Upgrading your home with energy-efficient systems like solar panels, energy-efficient windows, or HVAC systems may qualify you for a tax credit. The federal government often provides incentives for homeowners looking to go green.

Bonus Tip:

Check for state-level rebates or credits for additional savings.

11. State and Local Tax (SALT) Deduction

You can deduct up to $10,000 in combined state and local income, sales, and property taxes. This cap applies to both individual and married taxpayers filing jointly.

Reminder:

Ensure you’re not double-counting deductions if you’ve already benefited from a state tax refund.

12. Retirement Savings Contributions Credit (Saver’s Credit)

Low- and moderate-income taxpayers can claim the Saver’s Credit for contributing to retirement accounts like a 401(k) or IRA. The credit can range from 10% to 50% of your contributions, depending on your income.

Extra Tip:

This credit is in addition to the tax-deferred benefits of contributing to retirement accounts.

13. Gambling Losses

Did you know you can deduct gambling losses? You can claim losses up to the amount of your reported gambling winnings. Ensure you keep detailed records and receipts to substantiate your claims.

Caveat:

You must itemize deductions to claim gambling losses.

14. Hobby Expenses

If you generate income from a hobby, you can deduct expenses up to the amount of income earned. This applies to side hustles like crafting, photography, or selling baked goods at a local market.

Pro Tip:

Maintain records of all expenses related to your hobby to ensure accurate reporting.

15. Dependent Care Expenses

Parents can claim a tax credit for childcare expenses, including daycare, after-school programs, or babysitters, while they work or look for work. This credit can cover up to 35% of qualifying expenses, depending on your income.

Don’t Miss:

The credit is available even if the childcare provider is a relative, as long as they aren’t your dependent.

Conclusion

Overlooking tax deductions could mean leaving money on the table. By familiarizing yourself with these often-missed opportunities, you can reduce your tax burden and potentially increase your refund. Always consult with a tax professional to ensure you’re taking full advantage of the deductions you’re entitled to.

FAQs

1. Can I claim a tax deduction for working from home if I’m an employee? No, employees cannot claim the home office deduction. It’s limited to self-employed individuals or independent contractors.

2. Are medical expenses paid with an HSA deductible? No, expenses paid with Health Savings Account (HSA) funds are not deductible since the contributions to an HSA are already tax-free.

3. Can I deduct charitable contributions if I don’t itemize? For 2023, a special provision allows up to $300 for single filers and $600 for married filers to be deducted for charitable contributions without itemizing.

4. What qualifies as a dependent care expense? Expenses for daycare, babysitters, and after-school programs qualify if they enable you to work or look for work.

5. Are hobby losses deductible? No, hobby losses cannot be deducted. However, you can deduct hobby-related expenses up to the income earned from that hobby.