IRS Tax Deductions and Credits to Know Before You File Taxes

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Tax season can be stressful and complicated. Thankfully, tax credits and tax deductions can reduce your tax bill and ease the frustration of owing too much money to the IRS.

Here are some common IRS tax deductions and credits. Whether you are a homeowner, parent, charitable giver, older adult, or self-employed person, there are various ways to optimize your tax savings.

Common IRS tax credits and tax deductions

The 2026 tax season officially began on January 26, when the IRS started accepting returns. So, it's a good time to use these and other tax breaks (if you are eligible for them) to reduce tax liability.

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If you're an early filer and have already had someone prepare your return, this information can help you plan to maximize your tax savings for the 2025 tax year (returns you're filing now).

Consult with a qualified tax professional to ensure you take full advantage of the credits and deductions available to you in compliance with tax laws.

Doing so can help you to keep more of your hard-earned money and achieve greater financial stability.

Note: This is a list of common tax deductions and credits that may be available to you. Please note that it is not exhaustive and does not include any particular order or ranking.

The standard deduction

If you are like most taxpayers, you take the standard deduction instead of itemizing deductions.

The standard deduction reduces your taxable income by a predetermined, fixed dollar amount.
Itemized deductions can also reduce your taxable income, but the amount varies and is not predetermined.
Due to inflation adjustments and the enactment of the 2025 Trump/GOP tax bill, also known by some as the "big, beautiful bill," the base standard deduction amount remains high and has increased for the 2025 tax year.

However, to decide whether to itemize, you must know the standard deduction amount for each tax year. See What’s the Standard Deduction?

Family-focused tax credits

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Child Tax Credit: The child tax credit (CTC) allows eligible parents and caregivers to reduce their tax liability, possibly resulting in a tax refund. However, not everyone can claim the CTC, and credit amounts can differ for those who can. The child tax credit is based on income, filing status, the number of children, and whether the IRS considers your dependent a qualifying child.

Note: Some changes in the 2025 tax law affect the amount and the rules for claiming this popular tax credit. For more information on the CTC, see Child Tax Credit: What You Need to Know.

Earned Income Tax Credit (EITC): Aimed at individuals and families with low to moderate income, the EITC is a refundable tax credit based on earned income and family size. It can provide financial support to working individuals, especially those with children, but is also available to some taxpayers without children. Unfortunately, many eligible individuals are unaware of the credit or don’t know how to claim it, resulting in it being overlooked.

Child and Dependent Care Credit: The Child and Dependent Care Tax Credit can help you pay for childcare or dependent care services to enable you to work or search for a job.

You can claim up to $3,000 of eligible childcare expenses for one qualifying individual or up to $6,000 for two or more qualifying individuals.

This is a non-refundable tax credit, meaning it can reduce your federal income tax bill, but you cannot receive the credit as a tax refund.

Adoption Credit: The adoption tax credit is available for taxpayers who adopt or start the adoption process in a given tax year.

The credit can be applied to international, domestic, private, and public foster care adoptions. However, it does not apply to those who adopt their spouse's child.

The federal adoption tax credit for the 2025 tax year is worth up to $17,280 (inflation-adjusted yearly), but income limits apply.

Homeowner tax deductions

Mortgage Interest Deduction: Homeowners can deduct the interest paid on mortgage loans, reducing taxable income. This deduction can be particularly beneficial during the early years of a mortgage when interest payments are higher. How much you can deduct might depend on when you bought your home and your filing status.

For more information, see Deducting Mortgage Interest on Your Tax Return.

Mortgage Points: Points paid at the time of mortgage origination can often be deducted in the year they were paid, potentially lowering taxable income.

Gains on Home Sale: Individuals who sell their primary residence may qualify to exclude a portion of the capital gains from their taxable income, provided they meet certain ownership and use requirements. This is known as the capital gains tax exclusion for home sales.

Energy-Efficient Home Improvements: Taxpayers who invest in energy-efficient home improvements were previously potentially eligible for tax credits. For example, homeowners could lower their federal income tax bills by installing new energy-efficient windows, doors, water heaters, furnaces, air conditioners, and solar panels. However, under the 2025 Trump tax law, most residential energy-efficient credits are being accelerated toward expiration. Key energy credits for home improvements (including the Energy Efficient Home Improvement Credit and Residential Clean Energy Credit) will not be allowed for property placed in service after December 31, 2025.

Medical deductions

Medical Expenses: Taxpayers who itemize deductions can deduct qualifying medical expenses that exceed a certain percentage of their adjusted gross income (AGI), which can provide some relief for substantial healthcare costs.

Health Savings Account (HSA) Contributions: Contributions to an HSA are tax-deductible and can be used to pay for qualified medical expenses, offering a tax-efficient way to save for healthcare costs.

Long-term Care Insurance Premiums: Long-term care insurance provides benefits to policyholders dealing with long-term care expenses. If your insurance premiums are substantial, you may be eligible to claim a long-term care expenses deduction for some or all of the amount you pay to keep your policy.

This can help decrease your tax liability. However, it is important to remember that this tax benefit has certain IRS limitations.

Education credits and deductions

Student Loan Interest Deduction: If you paid interest on your student loan last year, you might be eligible for a tax deduction worth up to $2,500. By using this deduction, you can lower your taxable income.

However, the IRS has specific rules for who can claim the student loan interest deduction; only some are eligible for the maximum amount.

For more information, see How to Claim the Student Loan Interest Deduction.

AOTC: The American Opportunity Tax Credit (AOTC) is a partially refundable tax credit available to those currently enrolled in college. Eligible taxpayers can claim 100% of the first $2,000 spent on qualified education expenses and 25% of the next $2,000. The maximum credit is $2,500 per qualifying student. If the credit exceeds the tax owed, you can receive a refund for 40% of the remaining amount, up to $1,000 per qualifying student.

Lifetime Learning Credit: The Lifetime Learning Credit (LLC) is worth up to $2,000 per tax return and can be claimed for an unlimited number of years. However, the credit is not refundable. Unlike the American Opportunity tax credit, graduate students are eligible to claim the LLC, and students do not need to attend college at least half-time to qualify.

For more information, see 11 Education Tax Credits and Deductions.

Deduction for tip income: Under the newly enacted 2025 Trump tax bill, employees and self-employed individuals in occupations that customarily receive tips can deduct qualified reported tips from their federal taxable income. The maximum annual deduction is $25,000, and the break is available whether or not you itemize. Tips still must be reported on your W-2, 1099, or Form 4137; this is a deduction, not an exclusion, and higher earners may see the benefit phase out.

Overtime pay deduction: Taxpayers who earn overtime can temporarily deduct the portion of pay that exceeds their regular rate — typically the “extra half” with time-and-a-half — on their federal return. This overtime pay deduction is available even if you don’t itemize. The cap is $12,500 for individuals ($25,000 for joint filers), and it phases out at higher income levels. You can claim the deduction if the overtime is reported on appropriate tax forms and you include your Social Security number on your return.

Home Office Tax Deduction: Self-employed individuals are typically eligible to deduct expenses related to their home office. Here's more about the home office tax deduction.

Educator Expense Deduction: The educator expense tax deduction (also called the teacher deduction) allows some teachers, counselors, principals, or other instructors to write off classroom expenses and supplies on federal income tax returns. For the 2025 tax year, the maximum educator expense deduction is $300.

Military Moving Expenses: Active-duty U.S. military personnel who relocate due to a military order and permanent change of station may be able to deduct certain moving expenses not reimbursed by the military.

Special deductions for older adults

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Qualified Charitable Distributions: If you are 70½ or older, you can make qualified charitable distributions (QCDs) directly from your IRA to eligible charitable organizations.

These distributions can be helpful for retirees who want to support charitable causes while minimizing their tax liability.
QCDs fulfill required minimum distributions (RMDs) without being included in adjusted gross income (AGI).

Extra Standard Deduction: Once you turn 65, you become eligible for an extra standard deduction in addition to the regular standard deduction. This extra deduction reduces taxable income, potentially allowing retirees to keep more of their hard-earned money.

Bonus deduction for seniors (65 and older): Starting with the 2025 tax year, taxpayers who are age 65 or older can claim an additional but temporary federal tax deduction of up to $6,000 on top of the existing extra standard deduction for older adults.

This “senior bonus” deduction can lower your taxable income whether you itemize or take the standard deduction. It phases out for higher-income taxpayers, so eligibility depends on your modified adjusted gross income.

To qualify, you must be 65 by the last day of the tax year, include a valid Social Security number on your return, and file jointly if married.

Energy tax credits

EV Tax Credit: To encourage people to purchase electric vehicles (EVs), the federal government offered a tax credit of up to $7,500 for certain "clean vehicles." The EV tax credit amount depended on factors like the vehicle's sourcing, assembly, and when it was put into service. Used EVs could also qualify for a tax credit of up to $4,000. Due to EV tax rules, as of January 1, 2024, you could take the clean vehicle credit as a discount at the point of sale when purchasing the vehicle from a registered dealer. (Income limits apply to the EV credit.) Note: The EV tax credit ended as of October 1, 2025. Eligible vehicles purchased before that date may be claimed by eligible buyers on 2025 federal income tax returns.

EV Charger Tax Credit: If you install an electric vehicle charging station at home, you can receive a federal EV charger tax credit equal to 30% of the cost of hardware and installation expenses. The maximum credit amount is $1,000. Note: Under the new 2025 Trump/GOP tax and spending bill, the federal EV charger tax break expires on June 30, 2026.

Miscellaneous tax deductions and credits

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Charitable Contributions: Donations made to qualifying charitable organizations are tax-deductible for those who itemize, which can incentivize philanthropic giving. Be sure to contribute to legitimate charities and get and keep receipts for your donations. The IRS says that in most cases, the amount of charitable cash contributions taxpayers can deduct as an itemized deduction is usually limited to 60% of the taxpayer’s adjusted gross income. Note: Beginning in the 2026 tax year (returns typically filed in 2027) under the 2025 Trump tax law, taxpayers may deduct a limited amount of cash charitable contributions even if they don't itemize, while itemizers remain eligible for charitable deductions subject to new limitations.

Car loan interest: A new, temporary deduction lets many taxpayers deduct interest paid on a loan used to purchase a qualified vehicle assembled in the United States. The car loan interest deduction is available regardless of whether you itemize and is capped at $10,000 per year. To qualify, the loan must originate after December 31, 2024, be for personal use (not business), and the vehicle must meet IRS criteria for U.S. assembly. The benefit phases out for higher-income filers.

Jury Duty Pay Returned to Employer: If an employer continues to pay an employee's salary while serving jury duty and requires the employee to turn over the jury duty pay, the employee can deduct the amount turned over to the employer. Keep in mind that jury pay is taxable income.

Gambling Losses: While gambling winnings are taxable, taxpayers can deduct gambling losses up to the amount of their winnings if they itemize deductions. For the 2025 tax year, this means losses can offset winnings dollar-for-dollar when itemizing. Note: Beginning with the 2026 tax year (filed in 2027), the "big beautiful bill" limits the deduction for gambling losses to 90 % of losses (still only up to the amount of winnings). That will reduce the amount you can deduct and potentially create taxable “phantom income” even in a break-even year. For more information, see Taxes on Gambling Winnings and Losses.

Bad Debt (Uncollected): If you have previously included an amount in your income and cannot collect it, you may be able to deduct it as a bad debt. Check out IRS Topic 453 for more information.

Saver’s Credit: People with low to moderate incomes who contribute to retirement savings accounts may qualify for a tax credit designed to encourage retirement savings.

If your income falls within the credit limits, you can claim up to $1,000 for single filers or $2,000 for joint filers.

As Kiplinger has reported, for those who qualify for the Saver's Credit, the lower your income, the higher the percentage of retirement plan contributions you get back on your tax return.

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Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. A corporate attorney and business journalist with more than 20 years of experience, Kelley has helped taxpayers make sense of shifting U.S. tax law and policy from the Affordable Care Act (ACA) and the Tax Cuts and Jobs Act (TCJA), to SECURE 2.0, the Inflation Reduction Act, and most recently, the 2025 “Big, Beautiful Bill.” She has covered issues ranging from partnerships, carried interest, compensation and benefits, and tax‑exempt organizations to RMDs, capital gains taxes, and energy tax credits. Her award‑winning work has been featured in numerous national and specialty publications.