Tax write-offs and the benefits of using them

When filing your taxes, there are ways to minimize your taxable income — commonly known as a tax write-off. While many people have heard of tax write-offs, they may not be sure how to take them.

First, let’s answer, “what’s a write-off?” Simply put, a tax write-off is a reduction of income on your return. In tax lingo, it’s called a tax deduction. Tax credits may seem like they could fit the definition of a write-off but they aren’t since they reduce your overall tax bill. It’s beneficial to understand the tax write-off meaning because it can lower your tax bracket.

The U.S. taxes its citizens using a graduated tax rate. This means your income is divided into tax brackets, and each portion is taxed at the rate assigned to its bracket.

When you take write-offs, you can reduce your taxable income which may make you fall under a lower tax bracket. So, the higher your tax bracket, the more you could potentially save. For example, a $100 tax deduction is worth $10 to a taxpayer in the 10% bracket, while a $100 deduction is worth $37 to someone in the 37% bracket.

If you’re trying to figure out what to write off on taxes, below is a general list of common tax write-offs, including some more overlooked options.

Keep in mind, some deductions require taking an itemized deduction versus a standard deduction. What does that matter? Well, it’s generally only beneficial to itemize your deductions if the total of your itemized deductions is more than standard deduction.

State and local taxes

Believe it or not, state and local taxes are a federal tax write-off — and it’s more commonly referred to as the SALT deduction. The 2025 limit for this specific deduction is $40,000, and $20,000 for married filing separately filers. You can deduct property taxes, income taxes, and even sales taxes paid to a county or other local government during the year. This tax deduction is commonly missed because there isn’t an informational tax return or notice associated with it. It’s up to you to remember to deduct the amount paid.

Deductible Individual Retirement Account contributions

If you contribute to a Traditional IRA, you could be eligible to write off a portion or all of your retirement contributions as a tax deduction. With contribution limits up to $79,000 (or $10,000 if you’re age 50 or older), overlooking this tax deduction results in a missed opportunity to reduce your taxable income. Any contribution is reported as a deduction on 1040 Schedule 1.

Charitable contributions

While charitable donations are a common tax write-off, they are still overlooked because many people don’t think they donate enough per year to qualify.

Limits are generally based on your adjusted gross income, type of charity donating to, and method of donation. Cash and non-cash donations are deductible between 20% and 60% of your AGI. You can even write off out-of-pocket expenses incurred while donating your time to charity. (Think gas mileage to and from your charitable event or cost of goods purchased exclusively for the event).

Generally, you’d have to itemize deductions in order to deduct charitable contributions, but starting in the 2026 tax year, you will be able to deduct up to $1,000 ($2,000 for married filing jointly filers) in charitable contributions even if you don’t itemize.

Health Savings Account

Medical expenses can add up. To combat this, many employers offer Health Savings Accounts. Contributions made directly to the HSA, (not through payroll deductions) are a tax-deductible expense. HSA contributions made through a payroll deduction are not tax deductible since the contribution is not included in your income.

Tips

The tips deduction allows you to deduct up to $25,000 per return for tax years 2025 through 2028, regardless of whether you itemize or take the standard deduction. This deduction is not available to married filing separately filers. The deduction is claimed on Schedule 1A (Form 1040).

Overtime

The new overtime deduction is available to take 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 qualified surviving spouse filers) or $25,000 for married filing jointly filers.

Car loan interest

In tax years 2025 to 2028, you are allowed a personal deduction for interest you pay on qualified loans for the purchase of new personal-use passenger vehicles, if eligibility requirements are met. The deduction applies to loans for new vehicles purchased that were assembled in the United States.

An enhanced senior deduction

The senior deduction is a separate, additional deduction that allows eligible taxpayers to reduce their taxable income by $6,000. For married couples filing jointly, where both spouses are 65 or older, each spouse can take a $6,000 deduction ($12,000 in total).

— H&R Block