To ensure you receive the best service possible,
please enter your zip code below:
more ways to save money
AAA Banking offers flexible savings options, competitive rates and the trusted support you expect from AAA.
Tax deductions can help lower your taxable income, reducing the amount you owe when filing your taxes. But understanding what qualifies as tax-deductible and what doesn’t might help you make smarter financial decisions throughout the year.
Knowing the rules may save you money and help you avoid surprises come tax time.
AAA Members can confidently tackle tax season with unrivaled perks and privileges. This comprehensive guide will show you how to maximize your tax return with exclusive AAA discounts and rewards.
Read MoreA tax deduction reduces your taxable income, lowering what the IRS can actually tax. It’s different from a tax credit, which reduces your actual tax bill. For example, if you’re in the 32% tax bracket, a $1,000 deduction lowers your taxable income by $320, whereas a $1,000 tax credit reduces what you owe by $1,000.
For the 2026 tax year, the standard deduction is $15,750 if you’re single or $31,500 for married filing jointly. Itemizing your deductions could make sense if your qualifying expenses exceed those amounts.
Some deductions, called above-the-line deductions, can be claimed even if you don’t itemize. For example, qualified retirement plan contributions, student loan interest and health savings account (HSA) contributions. This means you can get these benefits in addition to taking the standard deduction.
Before filing season, one tax tip is to use a tax deduction calculator to help maximize your returns.
Many common expenses can reduce your taxable income. Here’s what typically qualifies:
Loan interest on the first $750,000 qualifies for homes purchased after December 15, 2017.
Yes, the deduction for property, state/local income and sales taxes is capped at $40,000 in 2025 for taxpayers making less than $500,000.
Cash and non-cash contributions to qualified 501(c)(3) organizations are deductible with proper documentation.
Yes, pre-tax contributions up to $23,500 in 2025 ($31,000 if 50+).
Self-employed individuals can deduct premiums for themselves and their families.
These expenses are only deductible for costs that exceed 7.5% of your adjusted gross income (AGI).
It is for up to $2,500 if your income is below certain thresholds.
For those who are self-employed and use a part of their home regularly and exclusively for their business.
Yes, businesses can deduct up to $2.5 million for qualifying tangible business property, like machinery and real property improvements.
Yes, it’s based on fair market value or sale price, depending on how the charity uses it.
Yes, as part of the SALT (state and local tax) deduction with the $40,000 cap.
Some expenses might seem like they should qualify, but they won’t lower your tax bill:
Contributions to candidates, parties or political action committees (PACs) are not deductible.
Homeowner’s association fees for personal residence can’t be deducted, but may be under other circumstances.
No, K-12 tuition payments aren’t deductible, but some states offer individual K–12 tax credits and deductions.
No, all contributions are made with after-tax dollars.
Travel between home and your regular workplace isn’t deductible.
Generally, no, even at venues owned by nonprofit organizations.
No, contributions to personal crowdfunding campaigns typically aren’t qualified charitable donations.
Premiums for personal life insurance policies aren’t deductible.
Most capital improvements aren’t immediately deductible, but can add to your cost basis when you sell.
No, individuals can’t deduct funeral expenses on personal tax returns.
Several potential tax deductions fall into gray areas, where your specific circumstances determine whether you can claim them:
Only for active-duty service members moving due to a change of station.
Home improvements such as energy-efficient upgrades, rental property maintenance, improvements for medical care and others may be deductible.
It may be deductible if you’re self-employed or your total medical expenses exceed 7.5% of AGI.
They may be deductible if they’re business-related or for certain employment discrimination cases; personal legal fees are not deductible.
While not federally deductible, many states offer state income tax deductions or credits.
Understanding which expenses qualify as tax deductions helps you maximize your tax savings. Keeping organized records and receipts throughout the year can help make tax time easier and also provides documentation if the IRS questions your deductions.
If you’re unsure, consult a tax professional to determine if you qualify for the deduction in your specific situation to ensure you’re taking advantage of every eligible deduction.
more ways to save money
AAA Banking offers flexible savings options, competitive rates and the trusted support you expect from AAA.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
