What are tax deductions?

Tax deductions lower the amount of income you’re taxed on — leading to a smaller tax bill. (Take a look at our help center article, “We find your deductions,” to learn more about deductions.)

 

Types of deductions

  • Business: Ordinary and necessary work-related purchases
💡 Ordinary and necessary - ‘Ordinary' means it's common in your field. 'Necessary' 
means it's 'helpful and appropriate' for doing your work —  it doesn't necessarily
have to be indispensable.
  • Educational:
    • Student loan interest
    • Teacher educational expenses  
  • Healthcare:
    • Medical or dental expenses more than 7.5% of your AGI
    • Health savings account (HSA)
  • Investment:
    • Sale of home
    • Individual retirement arrangements (IRAs)
    • Capital losses
    • Bad debt
    • Opportunity zones
    • Debt forgiven on my residence due to foreclosure, repossession, abandonment or because of a loan modification or short sale
  • Personal:
    • Deductible non-business taxes
    • Personal property tax
    • Real estate tax
    • Sales tax
    • Charitable contributions
    • Gambling loss
    • Miscellaneous expenses
    • Interest expense
    • Home mortgage interest
    • Moving expenses
    • Standard deduction
    • Itemized deductions

Want to learn more about what a tax deduction is? Take a look at our blog article