5 Tax Deductions You Can Claim Without Itemizing
Filing taxes can be quite challenging, and the phrase "tax deduction" often evokes images of stacks of receipts and intricate computations, all for saving a small amount of money. The bright side is that you don't have to go through the process of itemizing deductions to benefit from significant tax savings and lower your taxable income.
Each year when handling taxes, you must decide whether to opt for the standard deduction or not. itemizing your deductions Many of us overlook the standard deduction since it's simpler — and for many individuals, it currently offers a more advantageous arrangement.
However, many people aren't aware that even if you choose not to itemize deductions, the IRS still allows you to reduce your taxable income through various means. taxable income With specific "above-the-line" deductions. These act as guaranteed victories if you meet the qualifications.
Below are five tax deductions you can still claim even if you opt for the standard deduction as do many U.S. taxpayers.
5 Tax Breaks Available Even Without Itemizing Deductions
These reductions, listed on Schedule 1 of IRS Form 1040, decrease your adjusted gross income , known as AGI, could result in a reduced tax liability for you.
1. Traditional IRA contributions
Setting aside funds for your retirement is a wise decision that pays off both later and sooner. The growth of your IRA investments isn't taxed until withdrawal, allowing you to postpone dealing with those taxes. Additionally, when contributing to a conventional IRA, these payments might reduce your taxable income for the current year (in contrast, deposits made to a Roth IRA utilize post-tax dollars, so they aren’t eligible as deductions).
Any individual who invests funds into a traditional IRA You might be eligible for this above-the-line deduction. However, restrictions apply when deducting IRA contributions if either you or your spouse participate in an employer-sponsored retirement plan like a 401(k). Under those circumstances, certain income thresholds could restrict your capability to claim deductions on your IRA contributions.
Tax tip
You have up to the tax filing deadline on April 15, 2025, to make contributions to a traditional IRA for the year 2024. This is among the rare methods available to decrease your tax liability once the year has ended.
To express it differently, if you don’t If you have a retirement plan through your employer (and your spouse does not), there are no income restrictions for deducting your IRA contributions.
You're permitted to contribute up to $7,000 annually in 2024 and 2025 (increased to $8,000 if you’re 50 or over). If your earnings fall beneath the phaseout threshold, you'll be eligible for a tax deduction equal to the total contribution amount.
Below are the income caps for claiming deductions on contributions to a traditional IRA when you (or your spouse) participate in an employer-sponsored retirement plan, applicable for 2024 and 2025. For further details, consult the IRS guidelines on this calculation process. adjusted gross income (AGI) modified for traditional IRAs .)
Income limits for deducting contributions to a Traditional IRA when you're also covered by a workplace retirement plan.
| Filing status | Adjusted gross income for 2024 taxes (modified) | Adjusted gross income for 2025 after modifications | Deduction amount |
|---|---|---|---|
| Single, head of household status, or married filing separately (did not reside with spouse for the entire year) | Up to $77,000 | Up to $79,000 | Full deduction |
| $77,000 to $87,000 | $79,000 to $89,000 | Partial deduction | |
| $87,000+ | $89,000+ | No deduction | |
| Filing as married couples where both are covered under a workplace retirement plan | Up to $123,000 | Up to $126,000 | Full deduction |
| $123,000 to $143,000 | $126,000 to $146,000 | Partial deduction | |
| $143,000+ | $146,000+ | No deduction | |
| Filing as married couples where both spouses have coverage through an employer | Up to $230,000 | Up to $236,000 | Full deduction |
| $230,000 to $240,000 | $236,000 to $246,000 | Partial deduction | |
| $240,000+ | $246,000+ | No deduction | |
| Filing as married but living apart from one’s spouse for some part of the year | Up to $10,000 | Up to $10,000 | Partial deduction |
| $10,000+ | $10,000+ | No deduction | |
| Source: IRS |
Keep in mind that, should you (along with your spouse if you're married) be not If you're covered by an employer retirement plan, your contributions remain fully tax-deductible irrespective of how much you earn.
2. HSA contributions
If you have a high-deductible health plan (HDHP), contributing to a health savings account can help you save both immediately and down the line. Contributions to an HSA are tax-deductible, your funds grow without taxes until withdrawn, and when used for eligible medical costs, these withdrawals remain tax-free.
The deduction caps for Health Savings Account (HSA) contributions in 2024 (for tax filings made in 2025) are as follows:
- Up to $4,150 for individual recipients
- As much as $8,300 for family units
- Individuals aged 55 and above can contribute an additional $1,000.
Tax tip
You have the option to contribute to your Health Savings Account (HSA) for the 2024 tax year right up until the April 15, 2025, tax filing deadline. This is among the rare methods available to lower your tax liability even after the year has concluded.
The deduction caps for Health Savings Account (HSA) contributions in 2025 (applicable to tax filings made in 2026) are as follows:
- Up to $4,300 for individual recipients
- Up to $8,550 for family units
- Individuals aged 55 and above can contribute an additional $1,000.
To be eligible for HSA contributions, you need to be part of a qualifying HDHP and should not have coverage from another group plan.
Tax tip
Should your employer make contributions to your Health Savings Account, this sum will be included within your yearly contribution cap.
3. Tax deduction for student loan interest
While student loan repayments might be painful, there is a bright side: you can claim a deduction for up to $2,500 in interest paid annually on both federal and private student loans.
In order to be eligible for this complete deduction, you have to:
- have covered interest payments on a student loan for you, your spouse, or a dependent.
- have removed the loan to cover eligible educational costs.
- have a modified adjusted gross income (or MAGI) below the limits (see below).
- Should not be claimed as another person’s dependent.
The income thresholds for the student loan interest deduction applicable to 2024 tax returns, which will be submitted in 2025, can be found in the IRS guidelines (refer to the IRS instructions for more details). determining Modified Adjusted Gross Income for the student loan interest deduction ):
Income thresholds for deducting student loan interest in 2024
| Filing status | Adjusted modified gross income for 2024 | Deduction amount |
|---|---|---|
|
Unmarried, individual filer, head of household, or eligible widow or widower |
$0 to $80,000 |
Full deduction |
|
$80,000 to $95,000 |
Partial deduction |
|
|
$95,000+ |
No deduction |
|
|
Married filing jointly |
$0 to $165,000 |
Full deduction |
|
$165,000 to $195,000 |
Partial deduction |
|
|
$195,000 or more |
No deduction |
|
|
Married filing separately |
N/A |
No deduction |
| Source: IRS . |
4. Educator expense deduction
It's quite typical for instructors to spend their own funds on classroom materials. Thankfully, qualifying teachers may claim a deduction for at least part of these expenses.
Teachers, instructors, guidance counselors, and school principals who work at least 900 hours annually are eligible for this tax reduction of up to $300 (or $600 for married couples where both partners are involved in education).
This educator expense deduction includes expenditures related to work, like technological tools for classrooms, textbooks, stationery, training programs, and various essential resources.
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5. Self-employment deductions
What about freelancers, gig workers, and entrepreneurs? For those who are self-employed, there are multiple business tax deductions to assist in reducing your taxable income on Schedule C.
However, when you're completing your tax return and you input your net business income from Schedule C into it, Form 1040 , you might also be eligible for certain above-the-line deductions (which should be entered on Form 1040’s Schedule 1).
The three key elements are:
- The self-employment tax deduction works as follows: If you're self-employed, you must cover both the employer and employee shares of Social Security and Medicare taxes. However, half of this tax amount can be deducted.
- Contributions to your SEP IRA, SIMPLE IRA, or Solo 401(k) plans typically qualify for deductions.
- If you pay for health insurance and do not qualify for coverage through your employer, you have the option to deduct 100% of the premium costs for yourself, your spouse, or your dependents from your taxes.
Bottom line
Paying taxes isn't exactly enjoyable, but reducing your expenses can be rewarding. You don't have to navigate complex itemized deductions to lower your tax liability. Above-the-line deductions are accessible regardless of whether you choose the standard deduction or opt for itemizing, which simplifies the process of retaining more of your well-deserved income.
These reductions can accumulate rapidly, be it for paying down student loans, saving for retirement, or managing healthcare costs. Spending a short time verifying your qualification might result in hundreds or even thousands of dollars worth of tax savings.
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