Don’t overlook these common tax deductions in 2026

One of the ways to reduce your liability this tax year is to decrease your taxable income. And the best way to do this is by taking advantage of tax deductions.

There are some common tax deductions you can take “above the line” that reduce your tax return. Others will be considered “below the line” and they will reduce your taxable income.

What is a tax deduction and how does it reduce my taxable income?

A tax deduction reduces the amount of income subject to taxation from the IRS, ultimately reducing your overall tax liability.

There are two types of tax deductions: above-the-line deductions and below-the-line deductions. Another important concept to consider when reviewing deductions for taxes is that tax deductions are different than tax credits. Tax deductions lower your taxable income (indirectly lowering the tax owed) and tax credits lower your actual tax owed dollar for dollar.

What is tax deductible?

Not every expense is tax deductible. Generally, items that are tax deductible are eligible expenses related to your personal life or business (if you own a business or are self-employed). The eligible part is important. Why? Because tax laws change and what may have been eligible in one tax year may not be the next year.

What tax deductions can I claim?

The tax deductions you can claim are based on your activity during the year — think life changes such as having a baby, marriage, or buying a house. But smaller actions like donating to a charity or paying student loans can also lead to a deduction.

Of course, you can only claim deductions for expenses that apply to you or that you qualify for. For example, if you made a deductible Traditional IRA contribution last year, but not this year, then you wouldn’t be able to claim that deduction this year.

List of common tax deductions for 2026

From the home office deduction to retirement contributions, here’s a list of tax deductions you may want to know about. While this list doesn’t cover all the federal tax deductions out there, you’ll want to take note of several of these income tax deductions.

Above-the-line deductions: Deductions subtracted from your gross income to calculate your adjusted gross income are known as “Above-the-line” deductions.

1. Retirement contributions and Traditional IRA deductions

If you qualify to deduct an IRA contribution, your deduction will lower your taxable income, which in turn, will lower your tax. If you contribute to a 401(k) or similar qualified retirement plan through a payroll deduction, you may not even notice you’re lowering your tax bill.

With a Traditional IRA, you can still get a tax deduction without requiring access to an employer plan.

However, your tax break may be limited if you also participate in an employer plan. For self-employed taxpayers, SEP IRA and SIMPLE IRA contributions are “above the line” tax deductions. See the other self-employed deductions below.

2. Student loan interest deduction

Did you know you can deduct up to $2,500 of your qualified student loan interest? This education expense deduction is “above the line,” so you don’t have to itemize in order to take advantage of it, but you need to make below a certain level of income to qualify.

3. Self-employment expenses

With working side hustles becoming more popular recently, it’s no surprise that self-employment expenses are more common. For example, if you pay for your own qualified health insurance, that may count as an “above the line” deduction. Also, you can deduct one-half of your self-employment tax above the line.

On top of that, you can deduct business expenses like office supplies, advertising, and business travel from your business income.

4. Home office tax deductions

Speaking of self-employment, if you’re self-employed and have a home office that meets IRS standards, you can take a tax write-off for it called the home office deduction. For example, if your home office represents 4% of your home’s total square footage, you may be eligible to deduct 4% off that property’s utilities, insurance, and property taxes if you don’t use the simplified method to deduct home office expenses. Just remember there are strict rules around what constitutes a home office with “regular and exclusive use.”

5. HSA contributions

Health Savings Accounts (HSAs) are gaining in popularity as health care costs rise and as more employers put more of the cost of insurance on employees. Your after-tax HSA contributions are tax-deductible. Not only does the money grow tax-free when you use it for qualified health care costs, but you can use your contributions to reduce your tax liability to boot.

6. Alimony paid

If you pay alimony, you could take an above-the-line tax deduction. Generally, alimony is not deductible if your divorce was finalized after 2018. To qualify for the alimony tax deduction:

• You must make the payment in cash, not property
• The spouse must receive the payment under a divorce or separation agreement.

The agreement can’t specifically exclude the payment from being:

• Included in the recipient’s income
• Deducted by the payor spouse
• You can’t reside in the same household as your former spouse when the payment is made if divorced or legally separated.
• Liability for payments must end upon the death of either spouse.

7. Educator expenses

Teachers who incur out-of-pocket expenses can reduce their AGI by claiming a tax deduction of up to $300 (for 2025) for qualified K-12 education items that are used for the classroom. The deduction rises to a maximum of $600 (for 2025) if an educator is married to another eligible educator and filing under the status Married Filing Jointly, although neither can deduct more than $300 of their own expense. Starting in tax year 2026, educators can also deduct qualifying educator expenses as an itemized deduction without limitation.

Below-the-line deductions: Below-the-line tax deductions are subtracted after determining your adjusted gross income (AGI) — allowing you to arrive at your taxable income.

Below-the-line deduction only available to itemizers:

1. Below-the-line charitable donations deduction

You will need to itemize your deductions if you want to deduct your below-the-line charitable donations. Many people find it worth itemizing these deductions — particularly if you give regularly to a church or other charity. Beginning in 2026, the One Big Beautiful Bill Act also allows an above-the-line charitable deduction of up to $1,000 (and $2,000 for joint filers).

It’s also possible to deduct the current fair market value of goods you donate to charity. Make sure you get a receipt for your donations, whether they are cash or goods. And don’t forget to keep track of your mileage if you drive on behalf of a charity; that’s tax-deductible, too.

2. Mortgage interest deduction

If you own a home and itemize, you can deduct the qualified interest you pay on your mortgage. It’s also possible to deduct refinancing points and other aspects of your home ownership costs, including property taxes. For tax years beginning in 2026, Private Mortgage Insurance will once again be tax-deductible, thanks to a provision in the OBBBA.

3. State and local taxes

State and local taxes deduction are a federal tax write-off. The 2025 limit for the SALT deduction is $40,000. State and local taxes include income (or sales), real estate, and personal property taxes.

4. Medical expense deduction

If you’re itemizing deductions, you can take a medical expenses deduction if you have unreimbursed expenses that you paid and are more than 7.5% of your Adjusted Gross Income.

Below-the-line deduction available to itemizers and non-itemizers:

1. Tips deduction

The deduction is available for up to $25,000 per return in tips for certain taxpayers. It is allowed for taxpayers who file in with the following filing statuses:

• Single
• Head of Household
• Qualifying Surviving Spouse
• Married Filing Jointly

For Married Filing Jointly filers, the deduction is limited to $25,000 regardless of whether the spouses’ qualified tip income is more than $25,000.

This deduction is not available to taxpayers who file Married Filing Separately. This deduction expires after the 2028 tax year.

2. Overtime deduction

The new overtime deduction is available for eligible taxpayers in tax years 2025 through 2028. The deduction reduces taxable income by the taxpayer’s qualified overtime pay up to $12,500 (for Single, Head of Household, and Qualifying Surviving Spouse filers) or $25,000 (for Married Filing Jointly filers).

3. Car Loan Interest Deduction

From 2025 through 2028, you are allowed a personal deduction for interest paid on qualified loans for the purchase of new personal-use passenger vehicles, if eligibility requirements are met. The Car Loan Interest Deduction applies to loans for new vehicles purchased for personal use (not business or commercial).

4. An enhanced senior deduction

The senior deduction is a separate, additional deduction to reduce taxable income. Married couples filing jointly 65 or older can take a $6,000 deduction per eligible taxpayer ($12,000 in total). The deduction expires after the 2028 tax year.

What doesn’t count as a tax deduction?

While there are many tax deductions that can help offset your tax, these (unfortunately) don’t qualify:

• Car inspection fees
• Customs duties
• Employee business expenses (eliminated in 2017 tax law)
• Federal excise tax
• Federal income tax
• Gas tax
• License fees
• Gift tax
• Personal expenses
• Social Security, Medicare, FUTA, and RRTA taxes
• Real property improvements
• Tax paid for someone else

What documentation should I keep to support my tax deductions?

No matter what tax deduction(s) you take, be sure to properly document them.

Always keep records that prove your eligibility for each deduction. Examples include:

• Receipts for charitable donations (cash and goods)
• Mileage logs for charitable driving
• Medical bills and insurance statements
• Proof of home office expenses (utility bills, square footage calculations)
• Loan documents for car purchases
• Any agreements for alimony payments

Good documentation helps you avoid issues with the IRS and ensures you can claim every deduction you qualify for.

Get help claiming tax deductions

Understanding tax deductions is crucial if you want to maximize your potential tax refund and lower your tax bill at tax time.

Need help determining which tax credits or deductions apply to you? At H&R Block we’ll help you find potential tax credits and breaks, and you can rest assured that we’ll get you the biggest tax refund possible.