By Anastasia Taber, CFP®
Many people approach tax season with the goal of simply getting through it. In the rush to file, they often rely on the most common deductions and credits, potentially overlooking valuable opportunities to reduce their tax burden. However, strategic tax planning can significantly impact your overall liability.
Here are some frequently missed deductions and credits that may be applicable to your situation to help you save big.
Tax Deductibles vs. Tax Credits
Tax deductions reduce the amount of taxable income you incur before taxes are assessed. With the right deductions, you could potentially move into a lower tax bracket.
By contrast, tax credits apply after your liability has been calculated, reducing your overall tax bill. Credits are based on income, expenses, and other factors. Every credit dollar reduces your tax bill by the same amount.
Wealthy, high-income taxpayers may benefit more from deductions, while lower-income families may earn more from credits. Shrewd taxpayers take advantage of both.
State and Local Tax Deductions
The breaks most taxpayers ignore involve the imposition of state sales taxes. With the wild variance of tax laws from state to state, it’s easy to see how they get missed. However, they can add up.
States Without Income Tax
Taxpayers in states without income tax may be able to deduct major purchases up to the limits outlined by the IRS. Alternatively, they can track their sales tax incurred last year and base their deductions on those.
States With Income Tax
Taxpayers in states that charge income tax also must choose between those two structures (income vs. sales taxes). However, the income tax option is usually best. You can deduct up to $10,000 (or $5,000 for married couples filing separately) of combined property taxes and income or sales taxes.
Individual and Home-Based Tax Deductions and Credits
Many of the best opportunities for saving on taxes are centered around life and home. The following are some of the more overlooked or forgotten breaks.
Mortgage Interest Reduction
As of the 2025 tax year, homeowners who itemize their deductions can continue to deduct mortgage interest on loans up to $750,000. However, the deduction for mortgage insurance premiums expired after the 2021 tax year and is no longer available.
Note that the $750,000 limit on deductible mortgage debt was established by the Tax Cuts and Jobs Act (TCJA) and is set to revert to the previous $1 million limit after 2025.
Renewable Energy Credits
Homeowners switching to renewable energy sources can write off certain expenses. You may be able to take up to 30% of the installation costs for installing solar panels, water heaters, or HVAC systems. You may also get a non-refundable credit for a new electric vehicle if it meets IRS guidelines (credit amounts range from $3,750 to $7,500).
Saver’s Credit
The saver’s credit helps low-to-medium-income taxpayers contribute to an IRA, 401(k), 403(b), and certain other retirement funds. The credit runs between 10% and 50% of up to $2,000 for each individual.
Charitable Contributions
If you itemize your deductions or donate to a charity via certain approved strategies then you may be able to deduct the total from your taxable income.
Education Deductions
The IRS facilitates continuing education with several learning tax credits:
American Opportunity Tax Credits
Students can claim the first $2,000 spent (and 25 percent of the next $2,000) on approved educational expenses, such as tuition, books, and school fees.
Lifetime Learning Credit
The lifetime learning credit helps post-graduates continue their education. They can claim 20% of the first $10,000 spent on expenses, to a maximum of $2,000.
Student Loan Interest
Taxpayers repaying their student loans can deduct the amount they paid in interest over the last year. The maximum you can claim in 2023 and 2024 is $2,500.
Business Tax Deductions
Business owners and self-employed individuals have numerous options for reducing their tax bills.
Self-Employed Expense Deductions
Self-employed individuals can write off select expenses, such as continuing education, retirement savings, mileage reimbursement, and certain kinds of health insurance. Those working out of residences may qualify for home-office deductions as well.
Small Business Owner Tax Deductions
Some of the most helpful deductions for small business owners include:
Section 179 expenses, such as equipment and machinery
Check with your accountant to verify that you’re taking advantage of all applicable breaks.
Healthcare and Medical Deductions
You might qualify for certain expenses related to healthcare and medicine, including the following.
Medical Expense Deductions
If you itemize deductions, you may qualify to have certain medical expenses subtracted from your taxable income. Expenses must surpass 7.5% of your adjusted growth income.
HSA Contribution Deductions
If you’ve opened a health savings account (HSA), your contributions to the fund may be deductible.
Discover Hidden Tax Deductions and Credits
Many taxpayers overlook these valuable deductions, credits, and tax breaks—but there may be even more opportunities tailored to your situation.
Ready to explore how these savings could apply to you? Get started today by scheduling a 15-minute intro phone call online or reaching out to us at 515-557-1860 or invest@taberasset.com.
About Anastasia
Anastasia Taber is an Associate Advisor and leads the financial planning services division at TABER Asset Management, an independent, fiduciary wealth management firm, in Alexandria, Virginia, that strives to do one thing well: manage their clients’ money by creating wealth, building wealth, growing income, and preserving capital so they can experience financial freedom. Anastasia is a CERTIFIED FINANCIAL PLANNER® and has a Bachelor of Arts in English from Georgetown University. She has years of experience working for one of the largest REITS in the U.S., as well as in property management and accounting at a global law firm in Washington, D.C. Anastasia is passionate about exceeding her clients’ expectations and building caring, long-term relationships based on trust. She is known for being detail-oriented and committed to excellence in her work. Anastasia is a co-host on the Creating Wealth podcast. To learn more about Anastasia, connect with her on LinkedIn.
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