Most people pay their bills, buy their supplies, and go about their week without realizing that some of what they’re spending is quietly working against their tax bill. The IRS tax code is long, updated often, and – frankly – easy to tune out. Yet hidden within it are legitimate deductions for things you’re likely buying right now.
The rules have shifted in meaningful ways recently, especially after the One Big Beautiful Bill Act (OBBBA) introduced a wave of new deductions for the 2025 and 2026 tax years. Whether you’re self-employed, a freelancer, or a regular W-2 worker with side income, some of these write-offs may apply to you. Here’s a clear-eyed look at what qualifies, how much you can claim, and what the IRS actually requires.
1. Your Home Office Space
If you work for yourself and use part of your home exclusively and regularly for business, that space can become a genuine deduction. The home office deduction is available to self-employed individuals, independent contractors, and business owners who run part of their business from home. The key word is “exclusively” – the IRS does not bend on this point.
The area must be dedicated to business activities only. If your home office doubles as your kids’ playroom or workout space, the IRS won’t allow the deduction. That matters more than most people realize, and it’s one of the most common reasons the deduction gets denied.
You can use the simplified method and deduct $5 per square foot of your home office (up to 300 square feet), or use the regular method and calculate actual expenses like mortgage interest, utilities, insurance, repairs, and depreciation based on the percentage of your home used for business. For 2025, the simplified rate increased to $6 per square foot, raising the maximum annual deduction to $1,800 (up from $1,500 in 2024), according to Corneliuson & Associates.
If you’re an employee working remotely, you can’t claim a home office deduction. Before 2018, remote workers could deduct certain job-related expenses, but the Tax Cuts and Jobs Act eliminated this deduction for employees from 2018 through 2025. So this one is firmly in the territory of freelancers and the self-employed.
2. Your Phone and Internet Bill
This deduction surprises a lot of people, partly because it feels almost too routine to qualify. If you work from home, you might be able to write off part of your internet bill as a business expense. Freelancers and self-employed individuals can typically deduct a portion of their internet costs based on the percentage used for work.
You can only write off the portion of your internet usage that’s work-related. For example, if you use your internet for client communications roughly forty percent of the time, you can only write off forty percent of your internet bill. The math is simple; the documentation is what trips people up.
The same principle applies to your cell phone. To claim a deduction, you must determine how much of your cellphone usage is work-related versus personal use. Business calls, texts, emails, apps like Slack or Zoom, and data used to run your company all count as business use. You can deduct eligible phone costs on your Schedule C (Form 1040) if you’re self-employed or run a small business LLC.
W-2 employees working remotely cannot deduct their internet expenses but might seek reimbursement from their employer. That’s a meaningful distinction worth keeping in mind at benefits negotiation time.
3. Health Savings Account (HSA) Contributions
An HSA is one of the few places in the tax code that offers a triple benefit: contributions go in pre-tax, growth is tax-free, and qualified withdrawals are also tax-free. If you have a qualified Health Savings Account, you can deduct your contributions to the account, and you don’t have to pay tax on any interest you earn from it. For 2025, the contribution limit is $4,300 for singles and $8,550 for families. If you’re over 55, you can contribute an additional $1,000.
You need a High-Deductible Health Plan (HDHP) with a minimum $1,650 (self) or $3,300 (family) deductible to be eligible for an HSA. That’s an important gating requirement – not every health plan qualifies.
Saving for qualified medical expenses in an HSA or a flexible spending account could help reduce your gross taxable income. If the account is through your employer benefits, you may make pre-tax contributions directly from your paycheck. Either way, every dollar you contribute to a qualifying HSA reduces the income you’re taxed on – dollar for dollar.
4. Charitable Donations (Including Everyday Goods)
When you drop off a bag of old clothing or kitchenware at a thrift store run by a nonprofit, that trip has potential tax value. You can deduct cash donations to charities and nonprofits totaling up to sixty percent of your adjusted gross income. Donations of noncash goods like clothing, electronics, food, and cars are deductible up to fifty percent of your AGI.
The rules around who can actually claim this deduction have been shifting. To make a charitable donation tax-deductible in 2025, you have to itemize your deductions. Starting in 2026, that changes. Starting in 2026, you don’t have to itemize to claim the charitable tax deduction. Those who take the standard deduction can claim up to $1,000 as a single filer or $2,000 if married and filing jointly.
You can also deduct travel expenses for volunteering, such as gas and taxi or bus fare, but not the value of your donated time. That’s a detail many donors overlook entirely – your mileage to and from a charity site is a legitimate write-off too.
5. Car Loan Interest on a New American-Made Vehicle
This is a genuinely new deduction introduced in 2025, and it’s one that applies to a lot of everyday consumers. The Treasury and IRS provided guidance on the “No Tax on Car Loan Interest” provision enacted under the One Big Beautiful Bill. The proposed regulations relate to a new deduction for interest paid on vehicle loans incurred after December 31, 2024, to purchase new made-in-America vehicles for personal use. This new tax benefit applies to both taxpayers who take the standard deduction and those who itemize deductions.
If you take out a loan to buy a new car, minivan, van, SUV, pickup truck, or motorcycle after 2024, you might be able to deduct the interest you pay on the loan. You don’t need to itemize to claim the car loan interest deduction. The deduction is only available for the 2025 through 2028 tax years. Eligible taxpayers can deduct up to $10,000 of qualified car loan interest per year.
You’re eligible for this deduction whether you itemize or take the standard deduction, although the exact amount you can deduct depends on your income – with the credit not available if your adjusted gross income is over $100,000 for single filers or $200,000 for married filing jointly. The vehicle also must have been assembled in the United States.
6. Office Supplies and Equipment
For anyone running a business or freelancing, the small stuff genuinely counts. All those everyday items you buy to run your business are tax deductions: pens, paper, printer ink, folders, notebooks – the small stuff counts. So does the bigger stuff, like computers, printers, desks, and office furniture.
Most everyday expenses like office supplies, utilities, or employee wages can be deducted in the same year you pay for them. For example, if you buy printer paper in March, you deduct it when you file taxes for that year. This is called an immediate deduction, and it keeps things straightforward.
Larger purchases have additional options too. Under Section 179 of the tax code, you can deduct the full cost of certain equipment in the same year you buy it. You do not have to spread it out over several years. That can be a really significant tax deduction for businesses making bigger purchases. The 2025 One Big Beautiful Bill Act significantly increased Section 179 limits, raising the 2025 deduction cap to $2.5 million and the phase-out threshold to $4 million.
7. Retirement Account Contributions
Putting money into a traditional IRA or a qualifying workplace retirement plan doesn’t just build your future – it lowers your taxable income today. Even if you aren’t eligible for the Savers Credit, you can still reduce your tax bill by contributing toward a traditional IRA account. In 2025, the maximum contribution for a traditional IRA is $7,000, plus an additional $1,000 if you’re 50 or older.
If your employer offers a 401(k), it pays to maximize your contributions, especially if your employer matches them. The maximum contribution is $23,500 for 2025. Under SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62, and 63. For 2025, this higher catch-up contribution limit is $11,250.
Unlike workplace retirement plans, you have until the tax filing deadline to make last-minute IRA contributions that could reduce your previous year’s taxable income. Mark your calendars for the 2025 deadline: April 15, 2026. That gives you meaningful flexibility if you realize late that you’ve under-contributed.
A Few Things the IRS Won’t Allow
It’s worth being honest about what doesn’t qualify, because the lines can feel blurry. Your grocery bill, everyday clothing, or gym membership does not count unless it is directly tied to your business. Personal expenses dressed up as business costs are one of the most common audit triggers.
The IRS rule is pretty straightforward: an expense has to be “ordinary and necessary” for your business. That means it’s normal for your industry and it helps you operate. If you genuinely can’t explain the business connection in a sentence or two, that’s a sign to reconsider the claim.
Taxpayers are reminded that they need documents to show expenses or losses they want to deduct. Receipts, bank statements, and usage logs are your best protection if the IRS ever asks questions. Keeping digital records consistently throughout the year is far easier than reconstructing them in March.
How to Know If You Should Itemize
Many of the deductions above require you to itemize rather than take the standard deduction – and that decision matters. Most of the top personal tax deductions for individuals can only be taken if you itemize. Today, few taxpayers itemize – only about eleven percent – because the standard deduction was nearly doubled starting in 2018.
For 2025 (the taxes you file in 2026), the standard deduction amounts are $15,750 for singles or married filing separately. If your deductible expenses don’t clearly exceed that threshold, itemizing often isn’t worth the extra work. Still, when you combine mortgage interest, charitable donations, state and local taxes, and other deductions, it can absolutely tip the scale.
Running the numbers before you decide is the smart move. The IRS Interactive Tax Assistant can help a person decide if they’re eligible for many popular tax credits and deductions. A qualified CPA can do the same with your specific situation, often finding more than you’d find alone.
What Changed in 2025 and 2026
The One Big Beautiful Bill Act brought the most significant wave of individual tax changes in recent years. There are several new tax deductions introduced for the 2026 filing season. A deduction is an amount subtracted from the taxpayer’s income when filing, and deductions lower the taxable income resulting in lower federal income tax obligations.
New deductions include: seniors age 65 and older may be eligible to claim an additional $6,000 deduction; tipped workers may be eligible to deduct up to $25,000 for qualified tips; individuals may be eligible to deduct up to $12,500 ($25,000 for joint filers) for qualified overtime; and individuals may deduct up to $10,000 in qualified passenger vehicle loan interest. Those are substantial changes that affect real, everyday workers.
For the 2025 tax year, the maximum SALT deduction increased to $40,000 for single filers and married couples filing jointly. That’s a significant jump from the prior $10,000 cap and benefits many people in higher-tax states considerably.
The Takeaway
Tax deductions aren’t a loophole or a trick – they’re a feature of the tax code designed to reflect the real costs of earning income and supporting a household. The purchases covered here are legal, well-documented, and available to ordinary people who simply take the time to understand the rules.
The most important step is consistent record-keeping throughout the year. A shoebox full of crumpled receipts in April won’t protect you the way a well-organized folder of digital records will. Treat documentation as part of the purchase, not an afterthought.
Tax law continues to evolve, and the OBBBA changes make 2025 and 2026 particularly important years to review your situation. When in doubt, consult a qualified tax professional – the cost of good advice is almost always worth it, and in many cases, that advice is also deductible.
AI Disclaimer: This article was created with the assistance of AI tools and reviewed by a human editor.