Tax breaks come in many forms, but all tax deductions have one common trait: They can reduce taxable income and lower your overall tax bill.

A tax deduction—often called a write-off—is an expense that the IRS allows you to subtract from your taxable income, which helps reduce the amount of income tax you owe. (Note that a deduction shouldn't be confused with a tax credit, which lowers your tax liability, dollar for dollar.) The federal tax code has two main tax deductions available: the standard deduction and the itemized deduction. Each tax year, you must choose one or the other.

So, how do these deductions work, and which one should you choose? Here are some basic tips to help you better understand the two main types of tax deductions and some other potential deductions that may be available to you.

The standard deduction is the primary federal tax deduction available to almost all taxpayers who file a tax return. The deduction varies depending on tax filing status (for example, single versus married), age, and other factors, such as blindness. The standard deduction is adjusted to account for inflation each year, but it can also change if Congress rewrites tax laws, or if a law sunsets.

Since the passage of the Tax Cuts and Jobs Act (TCJA) in 2017, most taxpayers claim the standard deduction when filing their federal income tax returns. That's because the TCJA effectively doubled the deduction, which means the standard is larger than the itemized deduction for most people.

The One Big Beautiful Bill Act (OBBBA) of 2025 builds on that by slightly increasing the standard deduction for 2025 and making it the baseline for future inflation adjustments.

As a result, for 2025, the standard deduction will rise by $750 to $15,750 for single filers, and $1,500 to $31,500 for joint filers. Taxpayers aged 65 and older also qualify for the additional standard deduction, amounting to an extra $2,000 for single filers and an extra $1,600 for each eligible married filer.

For 2026, the standard deduction will be $16,100 for single filers, and $32,200 for joint filers. Taxpayers aged 65 and older also qualify for the additional standard deduction, amounting to an extra $2,050 for single filers and an extra $1,650 for each eligible married filer.

Itemizing tax deductions requires a little more work, but it can potentially lead to additional tax savings, depending on your situation. While there are many itemized deductions available, here are a few common ones:  

• Medical and dental expense deduction: If you have unreimbursed medical or dental expenses, you may be able to get a tax deduction. However, those expenses need to exceed 7.5% of your adjusted gross income (AGI) to be deductible. For example, if your AGI was $100,000, any medical expenses more than $7,500 would be allowed as an itemized deduction. To learn more about this deduction, see the IRS website. 
• Deduction for taxes paid: You may be able to deduct state and local income taxes or sales taxes you paid during the year (but there is no deduction for your federal taxes paid). This can also include state and local property taxes, such as taxes on your car and real estate. However, the TCJA limits the overall deduction for taxes to $10,000 ($5,000 if married and filing separately). 
• Deduction for interest payments: Homeowners can deduct mortgage interest and points on the first $750,000 of their mortgage ($375,000 if married and filing separately). But if you bought a house before December 16, 2017, you may still be eligible for the higher limitation of $1 million of the mortgage ($500,000 if married and filing separately). It's also possible to deduct some interest expenses related to your investments, see Investment Expenses: What's Tax Deductible? to learn more. 
• Charitable donation deduction: Donations of money or property to a qualified tax-exempt organization may be deductible. There are numerous limits on this deduction based on your AGI. Cash donations can only be deducted up to 60% of your AGI, donations of property (like a car or stock) are generally limited to 30% or your AGI, and if you donate both cash and property, the AGI limit is generally 50%. Any donations that aren't deductible in the current year can be carried forward up to five years. There are many other rules about deducting charitable donations. To learn more, read Charitable Donations: The Basics of Giving. 

Keep in mind, if you elect to report itemized deductions on your federal tax return, you'll have to track and keep evidence to support your deductible expenses.

The OBBBA also created a new tax deduction that grants taxpayers age 65 and older an even larger deduction of up to $6,000 for single filers, or $12,000 for qualified married couples. Along with the age requirement, both spouses must have a valid Social Security number, and the deduction phases out for income over a set limits. The phase-out limit is based on Modified Adjusted Gross Income (MAGI), and every dollar over the limit will lower the deduction by 6 cents.

• For single filers the MAGI limit is $75,000 and its completely phased out at $175,000.
• For joint filers the MAGI limit is $150,000 and its completely phased out at $250,000.

Importantly, this deduction is available whether you take the standard deduction or itemize. So, taken altogether, in 2025, a qualifying single filer could claim a total deduction of $23,750 ($15,570 standard deduction + $2,000 additional standard deduction for seniors + $6,000 new senior deduction), while qualifying married filers could claim up to $46,700 ($31,500 standard deduction + $3,200 additional standard deduction for seniors + $12,000 new senior deduction).

Unfortunately, this deduction is only temporary. Barring Congressional action, it will expire after 2028.

The following deductions from the OBBBA are also available if you take the standard deduction:

Up to $25,000 of "qualified" income from tips will now be eligible for a federal income tax deduction for tax years 2025 to 2028. The deduction is capped at $25,000 for both single filers and joint filers.

Note that though this provision is often referred to as "No Tax on Tips," qualified tip income will still be subject to payroll tax and potentially state income taxes (if applicable). The deduction starts to phase out once MAGI is over $150,000 for a single filer, and $300,000 for joint filers.

Up to $12,500 of qualified overtime pay is now eligible for a tax deduction. Joint filers can claim a larger deduction of $25,000. As with the provision on tips, this deduction is due to expire in 2028 and starts to phase out at a rate of $100 per $1,000 of income over a MAGI of $150,000 for a single filer, and $300,000 for joint filers.

Note that the deduction is available only for overtime pay required by the Fair Labor Standards Act (FLSA). Extra pay earned under state laws, collective bargaining agreements, or employers' compensation plans isn't eligible.