Deductions & Adjustments
Deductions reduce your taxable income. The standard deduction is a flat amount; itemized deductions add up individual expenses.
Standard Deduction
Most taxpayers use this
- Single: $15,000
- MFJ: $30,000
- HoH: $22,500
- No receipts needed
- Simple, flat amount
VS
Itemized Deductions
Use if total exceeds standard
- State & local taxes (SALT): $40K cap (2025-2029, OBBBA)
- Mortgage interest (up to $750K loan)
- Charitable contributions
- Medical expenses (>7.5% of AGI)
- Casualty losses (federally declared disasters)
🆕 New for 2025: One Big Beautiful Bill Act (OBBBA)
Signed into law July 4, 2025. Major new deductions available for 2025-2028:
- No Tax on Tips — Deduct up to $25,000 in qualified tips. Phases out at $150K/$300K MFJ.
- No Tax on Overtime — Deduct overtime premium pay up to $12,500 ($25K MFJ). Phases out at $150K/$300K.
- No Tax on Car Loan Interest — Deduct up to $10,000 on new vehicle loan interest. Phases out at $100K/$200K. New vehicles only.
- Senior Bonus Deduction — Additional $6,000 deduction for age 65+ (2025-2028). On top of standard deduction. Phases out above $75K/$150K MFJ.
- SALT Cap Raised — From $10,000 to $40,000 through 2029. Phases down for income over $500K.
Above-the-Line Deductions (Available to Everyone)
These reduce your AGI regardless of whether you take the standard deduction or itemize.
Student Loan Interest
Up to $2,500 per year. Phases out at $85K–$100K single ($170K–$200K MFJ).
HSA Contributions
Self-only: $4,300. Family: $8,550. 55+ catch-up: +$1,000. Triple tax advantage.
Self-Employment Tax
Deduct 50% of your SE tax (the employer-equivalent portion). Deduct health insurance premiums too.
Traditional IRA
Up to $7,000 ($8,000 if 50+). Deductibility phases out if you have a workplace plan.
Alimony (pre-2019)
Payments under agreements finalized before 2019 are deductible. Post-2018 agreements are not.
Educator Expenses
K-12 teachers can deduct up to $300 for classroom supplies without itemizing.