Did you know that millions of taxpayers miss out on valuable tax deductions every year? The IRS reports that over $1 trillion in tax deductions are claimed annually, but many people still leave money on the table—either because they don’t know about these deductions or they assume they don’t qualify.
If you want to maximize your refund, check out these 10 most overlooked tax deductions that could save you money.
1. State Sales Taxes
If you live in a state without an income tax (like Florida, Texas, or Washington), you can deduct state and local sales taxes instead. The IRS provides tables to estimate your deduction, but if you made big purchases like a car, boat, or home renovations, you can add those sales taxes to your total. Just remember, the combined deduction for all state and local taxes is capped at $10,000 per year.
2. Reinvested Dividends
This isn’t a traditional deduction, but it can reduce your taxable capital gains. When dividends from stocks or mutual funds are automatically reinvested, they increase your cost basis. That means when you sell, your taxable profit is lower (or your loss is higher). Many investors forget to adjust for this, leading to bigger tax bills than necessary.
3. Out-of-Pocket Charitable Contributions
Small donations add up! Besides cash gifts, you can deduct expenses like:
- Ingredients for meals you make for a nonprofit soup kitchen
- Stamps bought for a school fundraiser
- Mileage for charity-related driving (14 cents per mile in 2024)
4. Student Loan Interest Paid by Someone Else
Even if your parents (or someone else) pay your student loan interest, you may still qualify for the deduction—up to $2,500. The IRS treats it as if the money was given to you first, then used to pay the debt. Just make sure you’re not claimed as a dependent.
5. Moving Expenses (For Military Only)
Most taxpayers lost this deduction in 2018, but active-duty military members can still claim unreimbursed moving costs if they relocate due to orders. This includes travel, lodging, moving household goods, and even pet transportation. Plus, qualified reimbursements aren’t taxed.
6. Child and Dependent Care Credit
This credit is better than a deduction—it reduces your tax bill dollar-for-dollar. If you pay for childcare while working, you could get up to 50% of 8,000(foronechild)or16,000 (for two or more) back in 2024. Even if you use a dependent care FSA, you might qualify for an extra credit on expenses over $5,000.
7. Earned Income Tax Credit (EITC)
The EITC helps low-to-moderate-income workers, but 25% of eligible taxpayers miss it. For 2024, the credit ranges from 632to7,830, depending on income and family size. Even if you don’t owe taxes, you can still claim it—and you can file for past years if you missed it.
8. State Taxes Paid Last Year
If you owed state taxes when filing last year’s return, don’t forget to include that amount with this year’s state tax deduction. This includes estimated payments and withholdings—just remember the $10,000 cap on state and local tax deductions.
9. Refinancing Mortgage Points
When you refinance, you must deduct points over the loan’s life (e.g., 1/30th per year for a 30-year mortgage). But if you sell or refinance again, you can deduct the remaining points in that year—don’t let this small deduction slip away!
10. Jury Pay Given to Your Employer
Some companies require employees to hand over jury duty pay. If this happens, you can deduct that amount so you’re not taxed on money you never kept.
Don’t Leave Money on the Table!
Tax laws change often, and many deductions go unnoticed. Whether you file yourself or use a tax pro, make sure you’re claiming every credit and deduction you deserve. A little extra effort could mean bigger savings when tax season rolls around.
