Best tax deductions to claim this year

Core Insights - The article discusses the impact of tax deductions on taxable income and highlights the importance of choosing between standard deductions and itemizing deductions for maximizing tax benefits [1][2][3] Standard Deduction - Approximately 91% of U.S. taxpayers utilized the standard deduction in 2023, making it the most common tax break [2] - The standard deduction has nearly doubled since 2018 and now adjusts for inflation, providing significant tax relief without the need for itemization [3] - For taxpayers aged 65 and older, a new "senior bonus" deduction of up to $6,000 (or $12,000 for married couples) is available, which phases out at modified AGI levels of $75,000 for individuals and $150,000 for married couples [4] Above-the-Line Deductions - Certain deductions can be claimed even without itemizing, known as "above-the-line" deductions, which reduce gross taxable income [5] - Contributions to traditional IRAs and 401(k)s can significantly lower taxable income, with potential reductions exceeding $20,000 for high earners [6][7] - Health Savings Account (HSA) contributions offer a triple tax advantage and are expected to have expanded eligibility starting in 2026 [9][10] - Taxpayers can deduct up to $2,500 in student loan interest, but this deduction phases out for higher earners [11][12] Itemized Deductions - Itemizing deductions is beneficial primarily for those whose total itemized deductions exceed the standard deduction thresholds of $15,750 for single filers and $31,500 for married couples [13] - The state and local tax (SALT) deduction cap has increased to $40,400 for the 2025 tax year, significantly benefiting homeowners in high-tax states [16][19] - Mortgage interest deductions remain valuable, especially with the recent reinstatement of deductibility for private mortgage insurance (PMI) [20][21] - Charitable donations can be deducted if itemized, with new rules allowing standard deduction filers to deduct up to $1,000 for cash donations starting in 2026 [23][25] Medical Expenses - Medical expenses are deductible only if they exceed 7.5% of adjusted gross income, making it a challenging deduction for many [26][27]