Commonly Missed Tax Deductions
Some of the best tax deductions aren't complicated — they're just hiding in plain sight. Here are the ones most people never claim.
Student loan interest paid by parents
If a parent pays off a student loan for a child who isn't claimed as a dependent, the student can still deduct up to $2,500 in student loan interest — even though they didn't pay a dime. The IRS treats the parent's payment as a gift to the child, and then the child is treated as having paid the interest themselves. It goes on Schedule 1 as an above-the-line adjustment. The deduction starts phasing out at $80,000 of modified AGI for single filers ($165,000 for joint) in 2026.
Jury duty pay turned over to your employer
Some employers require you to hand over your jury duty pay in exchange for your regular salary while you serve. If that's you, the jury pay you surrendered is deductible as an above-the-line adjustment on Schedule 1. You report it as income and then deduct it right back out — it's a wash on your tax bill. Most people just eat the tax on money they never kept. Don't.
Medicare premiums for the self-employed
If you're self-employed and 65 or older, your Medicare Part B, Part D, and Medicare Advantage premiums count as self-employed health insurance — fully deductible on Schedule 1, Line 17, the same way regular health insurance is for any freelancer. This surprises people because Medicare feels like a government program, not an insurance plan, but the IRS has been clear on this for years. It also covers Medigap (supplemental) policies. For a self-employed person paying $174.70/month for Part B and $55/month for Part D in 2026, that's $2,756 off your AGI.
Home improvements for medical reasons
Ramps, grab bars, wider doorways, stair lifts, accessible showers — if the primary purpose is medical care for you, your spouse, or a dependent, these qualify as deductible medical expenses on Schedule A. The catch: you can only deduct the amount that exceeds any increase in your home's value. A $12,000 wheelchair ramp that adds zero resale value is fully deductible. A $30,000 accessible bathroom remodel that adds $20,000 in home value yields a $10,000 deduction. You need to itemize and your total medical expenses must exceed 7.5% of AGI. These numbers get big fast — a single major modification can push you past the threshold.
State sales tax deduction
If you itemize, you get to deduct either state income tax or state sales tax — not both. For residents of the seven states with no income tax (TX, FL, NV, WA, WY, SD, AK), the sales tax deduction is the obvious move. Even if your state has income tax, large purchases can make the sales tax deduction bigger. Bought a car in 2026? The IRS lets you add the sales tax on major purchases (vehicle, boat, aircraft, home building materials) on top of the standard IRS sales tax table amount. Most people just default to deducting state income tax and leave money on the table. Run both numbers.
Investment interest expense
If you borrow money to buy investments — margin loans from your brokerage, for example — the interest is deductible as an itemized deduction on Schedule A, up to your net investment income. Interest rates are high right now, so this can be meaningful. In 2026, if you paid $6,000 in margin interest and had $25,000 in investment income (dividends, interest, short-term gains), the full $6,000 is deductible. Long-term capital gains and qualified dividends don't count unless you elect to treat them as investment income — which means losing the preferential rate, so usually not worth it.
Gambling losses
You can deduct gambling losses up to the amount of your gambling winnings — but only if you itemize. A weekend in Vegas where you won $5,000 on one machine and lost $4,800 on everything else means you report $5,000 in income and deduct $4,800 in losses (on Schedule A). You can't deduct more than you won. You need documentation: a gambling log, losing tickets, ATM receipts from the casino, or player's card statements. The deduction doesn't exist at all if you take the standard deduction.
Military reservist travel expenses
Reservists who travel more than 100 miles from home for drill or reserve duty can deduct unreimbursed travel expenses — and this is an above-the-line deduction on Form 2106, not an itemized one. That means you don't need to give up the standard deduction to claim it. Mileage at the charity/moving rate (not the business rate), lodging, and 50% of meals all count. This applies to National Guard members too.
Educator expenses
K-12 teachers, counselors, principals, and aides can deduct up to $300 in unreimbursed classroom supplies — and it's an above-the-line deduction on Schedule 1. No itemizing required. Books, software, art supplies, PPE, cleaning supplies for the classroom all count. If both spouses are educators, each can claim $300 for a total of $600. This has been $300 since 2002 without an inflation adjustment, so it's not life-changing, but it's real money — about $66 in tax savings at the 22% bracket.
Health savings account contributions
HSAs are triple tax-advantaged: contributions are deductible, growth is tax-free, and withdrawals for medical expenses are tax-free. For 2026, you can contribute and deduct up to $4,150 (self-only) or $8,300 (family) — plus an extra $1,000 if you're 55+. The deduction is above the line on Schedule 1. No income phaseouts. You must be enrolled in a high-deductible health plan to contribute. What many people miss: if you're self-employed and already deducting premiums, you can also deduct HSA contributions on top of that. They're separate write-offs.
Charitable mileage
If you drive your personal vehicle for a qualified charity, you can deduct 14¢ per mile — and this deduction survived the TCJA, so it's available even if you take the standard deduction. Driving meals to a food bank, transporting rescued animals for a shelter, volunteering at events — track the miles. It adds up. Five hundred miles of charity driving a year is a $70 deduction. Modest, but it costs you nothing to track and costs the IRS nothing to allow.
Tax preparation fees for the self-employed
Before the TCJA, anyone could deduct tax prep fees as a miscellaneous itemized deduction. That's gone through 2025 and likely beyond. But self-employed filers can still deduct the business portion of tax prep fees on Schedule C. If you pay a CPA $800 and $500 of that is for Schedule C and self-employment tax prep, that $500 is deductible. The personal return portion isn't. Tax software works the same way — the upgrade to a self-employed version is deductible.
Safety deposit box
If you rent a safety deposit box to store investment-related documents — stock certificates, bond records, deeds — the rental fee is a miscellaneous itemized deduction. Post-TCJA, miscellaneous itemized deductions subject to the 2% floor are suspended, so this one's in limbo until Congress acts. But if the TCJA provisions expire as scheduled after 2025, this deduction returns in 2026. Worth tracking regardless — your CPA will know whether it's live when you file.
Casualty and theft losses
After the TCJA, personal casualty and theft losses are only deductible if they occur in a federally declared disaster area. If your home floods during a FEMA-declared disaster and your insurance doesn't fully cover the loss, the unreimbursed portion is deductible on Schedule A (itemized), subject to a $100 per casualty floor and a 10% of AGI aggregate threshold. Most people don't hit that threshold, but when they do — think major hurricane, wildfire, or tornado damage — the numbers can be enormous. If the TCJA provisions expire, the disaster-only restriction goes away and all casualty losses become deductible again.
Common questions
How do I know if a deduction is above-the-line or itemized?
Above-the-line deductions go on Schedule 1 and reduce your AGI regardless of whether you itemize. They're more valuable because they lower your AGI for everything that references it — tax bracket, phaseouts, state tax. Itemized deductions go on Schedule A and only help if they beat the standard deduction ($15,000 single / $30,000 joint in 2026). Self-employed health insurance, HSA contributions, half of self-employment tax, and educator expenses are above-the-line. Mortgage interest, charitable donations, and medical expenses are itemized. Our tax deduction checklist notes which is which.
Are there really deductions for gambling losses?
Yes, with tight limits. You can deduct losses only up to your winnings, and only if you itemize. You need documentation — a log with dates, locations, amounts won and lost. Casino player's cards help since they track your play. Win $10,000 and lose $12,000? You deduct $10,000. The remaining $2,000 can't be carried forward. Casual gamblers taking the standard deduction get nothing.
Can I claim both state income tax and state sales tax?
No — pick whichever is larger. For most people in states with income tax, the income tax deduction wins. In no-income-tax states (TX, FL, NV, WA, WY, SD, AK), sales tax is your only option. If you made a major purchase — car, boat, home renovation — the sales tax on it gets added atop the IRS table amount, which can push sales tax past income tax even in moderate-tax states. Run both numbers.
What happens if I claim a deduction I'm not entitled to?
Best case: the IRS sends a notice and you owe tax plus interest. Worst case: audit, a 20% accuracy-related penalty, and interest dating back to the original due date. The IRS cross-references your 1099s and W-2s. Inflating deductions intentionally is tax fraud. Verify everything with a CPA. See our tax deduction myths page for common misconceptions that get people in trouble.