Maximize Your Refund: 18 Often-Overlooked Tax Deductions Worth Checking Before Filing
Taxes are one of those things people love to hate. Every year, millions rush through their returns, hoping they don’t owe too much or, better yet, get a decent refund. But in that rush, plenty of money gets left on the table.
The IRS reported that 87% of taxpayers went the standard deduction route. No surprise, it’s simple and saves time. Convenience is great, but not if it means giving away cash that could have stayed in your pocket.
In this guide, we’re breaking down 18 commonly overlooked deductions that could lower your tax bill. Some only work if you itemize, others apply no matter what. We’ll cover both so you don’t miss out.
Every tax situation is different, so if you’re not sure what applies, talk to a tax professional before filing. A quick check could mean serious savings.
Table of Contents
Deductions That Require Itemizing
Itemizing takes more effort, but it can be worth it if your deductions add up to more than the standard deduction. If you own a home, make big charitable donations, or have high medical bills, this might be the better option.
Most people assume itemizing is only for the rich, but that’s not true. The key is knowing which deductions you qualify for and if they beat the standard deduction.
Let’s go through the ones people miss the most.
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State and Local Sales Tax (or State Income Tax Deduction)
If you live in a state with no income tax, this one is a no-brainer. You can deduct either state and local income taxes paid or the total sales tax you paid throughout the year, whichever is higher.
People in states like Florida, Texas, and Nevada tend to benefit more by claiming sales tax. The IRS even provides a sales tax deduction calculator if you don’t keep receipts (which, let’s be honest, no one does).
Big purchases like cars, boats, and home renovations make this deduction even more valuable. Just remember, you can’t claim both sales tax and state income tax, it’s one or the other.
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Charitable Miles Driven
Donating cash isn’t the only way to get a tax break. If you drive your car for volunteer work, you can deduct 14 cents per mile on your tax return.
This applies if you’re doing things like delivering meals, driving shelter animals to vet appointments, or helping out at fundraising events. You can’t deduct the time spent volunteering, but the miles add up if you’re driving often.
Keep a simple mileage log with dates, destinations, and purpose, guessing won’t cut it if the IRS asks questions. And no, driving to a charity event just to attend doesn’t count. It has to be for actual volunteer work.
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Gambling Losses (Only Deductible Up to Winnings)
If you like to gamble, this one matters. The IRS happily taxes every dollar you win from casinos, poker, or sports betting. But most people don’t realize they can deduct losses, too, as long as they don’t exceed their winnings.
That means if you won $3,000 but lost $4,500, you can only deduct up to $3,000 in losses. To claim this, you need receipts, tickets, or win/loss statements from casinos, just saying, “I lost a lot” won’t work.
If you gamble frequently, sign up for a casino loyalty program. They track your wins and losses for you, making tax time easier.
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Mortgage Points Paid on a Home Purchase or Refinance
Buying a home is a big investment, but mortgage points can lower your interest rate and potentially reduce your taxes. If you pay discount points when buying a primary home, you can usually deduct them in full the year you buy, provided they meet IRS conditions.
When refinancing, you typically spread the deduction over the loan’s life. But if you use part of the loan for home improvements, you might deduct some points upfront.
If a seller pays the points, you can still deduct them, but you’ll need to adjust your home’s purchase price accordingly. Check your closing documents to ensure you’re deducting actual discount points, not origination fees.
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Medical Expenses Over 7.5% of AGI
Medical bills can drain your bank account, but they might also lower your tax bill. You can deduct medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI).
Most people don’t hit that threshold unless they had a major surgery, expensive treatments, or high insurance premiums. Prescription medications, eyeglasses, hearing aids, and even travel costs for medical care count.
Insurance premiums paid with pre-tax dollars (like those deducted directly from your paycheck) don’t count, so check how you’re paying. If you had big medical bills in 2024, this deduction could be a game-changer.
State Tax Refund (If You Itemized Last Year)
Getting a state tax refund might be taxable, but only if you itemized deductions on your federal return last year. If you took the standard deduction, your refund is just money back, no extra taxes.
But if you deducted state income taxes, then got a refund the next year, part of it could be considered taxable income. The IRS sees it as a correction to your previous deduction.
If this applies to you, expect a 1099-G form from your state, and be ready to report it properly. Ignoring it could mean a surprise tax bill later.
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State Disability Insurance (SDI) Payments
In some states, part of your paycheck goes toward State Disability Insurance (SDI) instead of regular state taxes. California, New Jersey, and a few others do this. Since SDI is technically a tax, you might be able to deduct it just like state income tax, but only if you itemize.
This one gets missed because it’s taken straight out of paychecks and isn’t something people manually pay. Check your W-2 for SDI withholding. If you see it, you might have an extra deduction waiting for you.
Deductions Available Even If You Take the Standard Deduction
Not all tax breaks require itemizing. Some deductions come straight off your taxable income no matter what. These are called above-the-line deductions, and they can make a real difference in how much you owe.
Many taxpayers skip these because they assume only itemizers get tax perks. That’s a mistake. If you qualify for any of these, claim them.
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Student Loan Interest (Up to $2,500)
Paying off student loans feels endless, but at least some of that interest is deductible. The IRS lets you deduct up to $2,500 in interest paid on qualified student loans.
Unlike many deductions, this one doesn’t require itemizing, which makes it an easy win. Not everyone qualifies, though. If your income is too high, the deduction starts shrinking fast.
For single filers, it begins to phase out at a modified adjusted gross income (MAGI) of more than $80,000 and disappears completely at $95,000. Married couples get a little more room, with phaseouts between $165,000 and $195,000.
If someone else paid the loan on your behalf, but you’re legally responsible for it, you can still claim this deduction. Just make sure you check Form 1098-E, which your lender sends if you paid at least $600 in interest for the year.
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Self-Employed Health Insurance Deduction
Working for yourself has perks, but health insurance costs aren’t one of them. If you’re self-employed, those monthly premiums can add up fast. The good news is, they’re 100% deductible as long as you meet the qualifications.
This covers health, dental, and even long-term care insurance for yourself, your spouse, and your dependents. The catch? You can’t claim this deduction if you’re eligible for a health plan through another job, even if you don’t actually use that plan.
Also, the deduction is capped at the amount of your self-employment income for the year. If your business didn’t make a profit, you can’t claim this one. But for those paying full price for coverage, it’s a great way to lower taxable income without itemizing.
Educator Expenses ($300 for Teachers)
Teachers already spend too much of their own money on classroom supplies. This deduction won’t reimburse everything, but it helps a little.
If you’re a K-12 teacher, instructor, counselor, principal, or aide working at least 900 hours a year, you can deduct up to $300 in out-of-pocket expenses. Married teachers filing jointly can claim $600 if both qualify.
This covers things like books, art supplies, software, and even PPE or sanitizing supplies used in the classroom. You don’t need receipts to claim this, but keeping records is always smart.
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Home Office Deduction (For Self-Employed Individuals Only)
Having a dedicated home office can save you money at tax time, but only if you’re self-employed. Employees working remotely don’t get this break, no matter how much time they spend in Zoom meetings.
To qualify, the space must be used exclusively for business, no doubling as a guest room, playroom, or personal gym. There are two ways to calculate the deduction. The simplified method gives you $5 per square foot, up to 300 square feet (max deduction: $1,500).
The actual expense method lets you deduct a percentage of rent, mortgage interest, utilities, and internet based on the portion of your home used for work. If you rent, this one’s a must-check. Just make sure you’re using the space only for business.
Military Moving Expenses (For Active Duty Only)
Most moving expenses aren’t deductible anymore, but active-duty military members still get a break. If you’re relocating due to a permanent change of station (PCS), certain moving costs can be deducted.
This includes transportation, lodging, and storage fees for household goods. Personal expenses like meals during the move don’t count. The move must be required by the military, not just a personal choice.
Keep receipts for moving services and gas or mileage if you drove your own vehicle. This one is easy to miss since most taxpayers lost this deduction years ago, but it’s still in place for service members.
Retirement Contributions for Low-Income Earners (Saver’s Credit)
Saving for retirement is already smart, but the Saver’s Credit makes it even better. If your income is below a certain level, the IRS gives you a tax credit for contributing to a 401(k), IRA, or similar retirement account.
Unlike a deduction, which lowers taxable income, this credit directly reduces taxes owed. The credit is worth 50%, 20%, or 10% of your contributions, depending on your income.
For 2024, the full 50% credit applies if your AGI is $46,000 or less for married filing jointly, $34,500 or less for head of household, or $23,000 or less for single filers.
Even if you don’t get the full 50%, anything helps. Many people miss this because they assume tax breaks only apply to high earners.
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Jury Duty Pay Given to Employer
Serving on a jury isn’t just a time suck, it can mess with your paycheck, too. Some employers keep paying your salary while you serve, but require you to hand over the jury duty pay. If that happens, the IRS still considers the jury duty check as taxable income.
The good news? You can deduct the amount you gave to your employer so you’re not taxed twice. If you got $50 per day for jury duty but had to sign it over, report the income and then deduct the exact amount.
Dependent Care Flexible Spending Account (FSA) Contributions
If you paid for childcare, after-school programs, or summer camp using a Dependent Care FSA, that money is essentially tax-free because it reduces your taxable income.
This isn’t a traditional deduction, it’s a pre-tax contribution that lowers your taxable income before it affects your tax return. You can contribute up to $5,000 pre-tax per household for 2024, or $2,500 if you are married and file separately.
The catch? You must use the money within the plan year or during any available grace period, or it will be forfeited. Eligible expenses include daycare, nannies, preschool, and even elder care for a dependent adult.
Many people contribute through their employer but forget to submit claims for reimbursement. Don’t leave free tax savings on the table.
Tax Preparation Fees (For Self-Employed Filers Only)
Most people can’t deduct tax prep fees anymore, but self-employed filers still can. If you run a business or do freelance work, any fees paid to an accountant, tax software, or legal services related to tax filing can be deducted as a business expense.
This also includes costs for electronic filing or bookkeeping services used to prepare taxes. Regular W-2 employees can’t claim this one, but if you’re self-employed, this should be part of your tax strategy.
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Self-Employed Retirement Plan Contributions
Saving for retirement gets even better if you work for yourself. Contributions to a SEP IRA, SIMPLE IRA, or Solo 401(k) are fully deductible, reducing taxable income while growing your nest egg.
In 2024, a Solo 401(k) allows up to $23,000 in employee contributions, with an additional $7,500 catch-up contribution if you are 50 or older, making the total employee contribution $30,500.
Also, you can make employer contributions of up to 25% of your net self-employment income, with a total contribution limit of $69,000 for those under 50 and $76,500 for those 50 or older.
A SEP IRA lets you contribute up to 25% of your net self-employment income, with a maximum contribution of $69,000 in 2024.
These plans are flexible and work well for freelancers and small business owners. If you’re self-employed and not using this, you’re leaving money on the table.
Keep More of Your Money
Most taxpayers take the easy route, missing out on valuable deductions that could mean thousands in savings. Some only apply if you itemize, others work no matter what.
The key is knowing which ones fit your situation. Use this list, check your numbers, and see if you’ve been handing the IRS more than you should.
If you’re unsure, a tax professional can help make sure you’re getting every deduction you qualify for. Don’t leave free money behind.
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