20 Most Missed Tax Deductions That Could Save You Thousands

Deductions You Might Be Missing

The tax code is complex, and even diligent filers overlook legitimate deductions. Here are 20 commonly missed deductions that could put money back in your pocket.

1. State Sales Tax

If you live in a state with no income tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming), you can deduct state and local sales tax instead. This is particularly valuable for big purchases like vehicles or home renovations. Use the IRS Sales Tax Calculator to determine your deduction.

2. Student Loan Interest Paid by Parents

If your parents paid your student loan interest, the IRS treats it as if you paid it, as long as you are not claimed as a dependent. You can deduct up to $2,500 in student loan interest.

3. Jury Duty Pay Given to Employer

Many employers require you to turn over jury duty pay while still paying your salary. You can deduct the amount you gave back to your employer.

4. Educator Expenses

Teachers, instructors, counselors, and principals can deduct up to $300 of unreimbursed classroom expenses. This is an above-the-line deduction, meaning you do not need to itemize.

5. Health Savings Account (HSA) Contributions

If you have a high-deductible health plan, HSA contributions are tax-deductible, grow tax-free, and can be withdrawn tax-free for medical expenses. For 2025, limits are $4,300 (individual) and $8,550 (family), plus $1,000 catch-up for age 55+.

6. Self-Employment Tax Deduction

Self-employed individuals can deduct 50% of their self-employment tax (the employer-equivalent portion). This is an above-the-line deduction.

7. Charitable Mileage

If you drive for charitable purposes, you can deduct 14 cents per mile. Do not forget parking and tolls related to volunteer work.

8. Investment Management Fees

While miscellaneous itemized deductions were suspended through 2025 for individuals, certain investment expenses for pass-through businesses remain deductible.

9. Energy-Efficient Home Improvements

The Residential Clean Energy Credit offers 30% of the cost of solar panels, solar water heaters, wind turbines, geothermal heat pumps, and battery storage. The Energy Efficient Home Improvement Credit provides up to $3,200 per year for insulation, windows, doors, and heat pumps.

10. Moving Expenses for Military

While most taxpayers lost the moving expense deduction, active-duty military members can still deduct unreimbursed moving expenses for a permanent change of station.

11. Gambling Losses

You can deduct gambling losses up to the amount of your gambling winnings. Keep detailed records of wins and losses.

12. Hobby Income Offset

While hobby expenses cannot create a loss, you can use them to offset hobby income reported on Schedule 1.

13. Medical Miles

If you drive to medical appointments, you can deduct 21 cents per mile (2025 rate) as a medical expense if you itemize and your medical expenses exceed 7.5% of AGI.

14. Refinancing Points

If you refinanced your mortgage, the points paid must be amortized over the life of the loan. Many taxpayers forget to claim this annual deduction.

15. Foreign Tax Credit

If you paid taxes to a foreign government on foreign-source income, you can generally claim a credit or deduction. The credit is usually more beneficial.

16. Casualty Losses in Disaster Areas

If you suffered losses in a federally declared disaster area, you may deduct uninsured casualty losses.

17. Business Use of Personal Vehicle

If you use your personal car for business (not commuting), deduct 70 cents per mile for 2025 or track actual expenses.

18. Out-of-Pocket Charitable Expenses

Beyond cash donations, deduct supplies you bought for volunteer work, ingredients for food you prepared for a charity, stamps for a charity mailing, etc.

19. Traditional IRA Contributions

Even if you have a workplace retirement plan, you may still be able to deduct traditional IRA contributions depending on your income level and filing status.

20. Clean Vehicle Credit

Purchasing a qualifying new electric vehicle can earn you a credit up to $7,500. Used EVs qualify for up to $4,000. Income limits and vehicle price caps apply.

How to Catch Every Deduction

The average DIY tax filer misses $460 in deductions annually. AI-powered tax software like Taxation.ai scans your financial data against hundreds of deduction rules, flagging opportunities you might overlook. Upload your documents and let the AI ensure you are not leaving money on the table.