When tax season rolls around, most people focus on the obvious deductions—like mortgage interest or charitable donations—but there are many lesser-known deductions that can save you serious money. Knowing which expenses you might be missing can help lower your taxable income and increase your refund. Here are some of the most commonly overlooked tax deductions and how to take advantage of them.
1. State Sales Taxes
If you live in a state that doesn’t have income tax, or if you made a large purchase during the year—like a vehicle, boat, or major renovation—you may benefit from deducting state sales tax instead of state income tax. You can choose to deduct either, but not both.
Tip: Use the IRS’s optional sales tax calculator or keep your receipts to tally up what you spent throughout the year.
2. Out-of-Pocket Charitable Contributions
Most people remember to deduct large charitable donations, but many forget about the smaller, itemized costs associated with volunteering or supporting nonprofits.
- Driving to volunteer? You can deduct 14 cents per mile driven for charitable service.
- Purchased supplies for a fundraiser or event? Those expenses may be deductible.
Just be sure to keep detailed records and receipts.
3. Job Search Expenses
If you were searching for a new job in your current field, certain expenses may be deductible—even if you didn’t get the job.
- Resume preparation costs
- Travel expenses related to interviews
- Employment agency fees
Note that these deductions were suspended for most taxpayers under the Tax Cuts and Jobs Act until 2025, but may still apply in limited circumstances for self-employed individuals.
4. Student Loan Interest Paid by Someone Else
If someone else paid your student loan—such as a parent—you can still deduct the interest yourself, as long as you’re not claimed as a dependent on their return.
What this means: The IRS considers this a gift to you, and you’re allowed to deduct up to $2,500 in interest paid per year.
5. Self-Employment Expenses
Freelancers, gig workers, and self-employed individuals often forget to claim all their legitimate business expenses. These can add up quickly and reduce your taxable income.
- Home office deduction: If you regularly use part of your home exclusively for business.
- Business mileage: Keep detailed records for any driving done for work purposes.
- Phone and internet use: A portion may be deductible if used to operate your business.
6. Medical and Dental Expenses
If your qualified medical expenses exceed 7.5% of your adjusted gross income, you may be able to deduct them. These go beyond just doctor’s visits or prescriptions.
- Travel costs for medical care: Including mileage and public transportation.
- Health insurance premiums: Especially if you’re self-employed.
- Medical equipment: Such as crutches, wheelchairs, or hearing aids.
7. Educator Expenses
Teachers and eligible educators can deduct up to $300 (or $600 for married educators filing jointly) of unreimbursed classroom expenses.
This includes items like books, supplies, computer equipment, and even educational software.
8. Mortgage Points
If you bought a home and paid points to reduce your mortgage interest rate, those points might be deductible.
Key requirements: The mortgage must be for your main home, and the payment of discount points must be clearly stated on your settlement statement.
Final Thoughts
Tax rules can be complex, but taking the time to understand potential deductions could mean more money in your pocket. Don’t leave anything on the table—especially the small, easy-to-miss deductions that really add up over time. When in doubt, consult a tax professional who can help you maximize your return and stay compliant with IRS guidelines.