Common Tax Deductions Explained
A deduction lowers your taxable income. It is not a dollar-for-dollar tax cut: a $1,000 deduction saves $220 of tax if you are in the 22% bracket, and $120 if you are in the 12% bracket. Credits are different, and they are explained in the tax credits guide. Deductions come in two kinds: above-the-line adjustments, which reduce income before AGI is calculated, and below-the-line itemized deductions on Schedule A, which reduce AGI to taxable income.
Above the line vs below the line
Above-the-line adjustments, such as one-half of self-employment tax, student-loan interest, and educator expenses, are available whether you itemize or not. Below-the-line deductions on Schedule A only help if their total beats your standard deduction, as the standard deduction guide explains.
The standard deduction, again
For most people the standard deduction is the biggest deduction they will ever claim. For 2026 it is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household. About 90% of taxpayers take it. The itemized deductions below only matter when they add up to more than that amount, so the standard deduction is the bar every other deduction has to clear.
The standard deduction needs no receipts and no Schedule A. It is claimed automatically, with add-ons of $2,050 for single filers and heads of household who are 65 or older or blind, and $1,650 per qualifying spouse for joint filers.
Schedule A: the itemized deductions
The four main Schedule A categories are SALT, mortgage interest, charitable gifts, and medical expenses. For 2026 the SALT cap is $40,400. Mortgage interest is deductible on up to $750,000 of acquisition debt for loans taken after 15 December 2017, or $1,000,000 for older loans. Cash gifts to qualifying public charities are generally deductible up to 60% of AGI. Medical and dental expenses count only for the portion above 7.5% of AGI.
Because the SALT cap and the medical floor both limit what counts, many households with a mortgage and modest charity still fall short of the standard deduction. That is normal, and it is not a mistake. It is the system working as designed after the standard deduction was raised.
Above-the-line adjustments
Above-the-line adjustments are the deductions that everyone can use, itemizer or not, because they come off before AGI. One-half of self-employment tax is the largest for freelancers. Student-loan interest is deductible up to its statutory limit for borrowers who meet the income rules. Eligible educators can deduct up to the statutory amount for classroom supplies they paid for out of pocket.
The health flexible spending account is another above-the-line benefit for employees. For 2026 the salary-reduction limit is $3,400, up $100 from 2025, with a carryover maximum of $680. These adjustments also lower AGI itself, which can help with other limits that are based on AGI.
New deductions: check before you rely on them
Recent legislation added new above-the-line deductions, including deductions related to tips, overtime pay, and car-loan interest, and an additional deduction for taxpayers aged 65 and over. The exact caps, income phase-outs, and eligibility rules for these new deductions were reported differently by different secondary sources at the time this site was written, and they do not appear in the IRS summary release IR-2025-103. This guide therefore does not publish any figure for them.
That is deliberate. A wrong cap is worse than no cap. Before relying on any of these new deductions, check the current IRS guidance for working Americans and seniors on irs.gov, and check the instructions for the form or schedule that claims the deduction. The IRS pages are the only source that settles the figures.
What deductions cannot do
Deductions cannot make tax disappear, and they cannot turn a personal expense into a business one. A deduction is only worth your marginal rate, so a deduction in the 12% bracket saves 12 cents per dollar, not a dollar per dollar. Keeping receipts does not help if the expense was never deductible, and claiming a deduction you do not qualify for is the kind of error the IRS matching programs are built to find.
The best approach is to keep good records, know your standard deduction, and check once a year whether itemizing beats it. For most people that check takes ten minutes, and for most people the standard deduction wins.
Sources: Internal Revenue Service, IR-2025-103 and Revenue Procedure 2025-32 (2026 standard deduction, FSA limit), https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill; IRS Schedule A and Schedule 1 instructions.