Tax season is the perfect opportunity to reduce your liability and maximize your refund—if you know where to look. The IRS offers a variety of deductions that can significantly impact your taxable income, and many are often overlooked. Whether you’re a salaried employee, freelancer, business owner, or retiree, understanding these deductions can help you keep more of your hard-earned money. Below are 20 tax deductions you may qualify for in 2025 that could help increase your IRS refund.
1. Student Loan Interest Deduction
You can deduct up to $2,500 of interest paid on qualified student loans, even if you don’t itemize. This is an above-the-line deduction and reduces your adjusted gross income (AGI).
2. Mortgage Interest Deduction
If you itemize, you may deduct interest paid on home mortgages up to $750,000 of debt (or $1 million for loans taken before December 15, 2017).
3. State and Local Taxes (SALT) Deduction
You can deduct up to $10,000 in state and local income, sales, and property taxes combined. This cap applies to both individuals and married couples filing jointly.
4. Medical and Dental Expenses
If your unreimbursed medical expenses exceed 7.5% of your AGI, the excess amount is deductible. This includes surgeries, prescription drugs, dental care, and even travel for medical treatment.
5. Charitable Contributions
Cash and non-cash donations to qualified charities are deductible if you itemize. For 2025, up to 60% of your AGI may be deductible in qualified donations.
6. Educator Expenses
Teachers can deduct up to $300 for unreimbursed classroom expenses (or $600 if both spouses are eligible educators).
7. Traditional IRA Contributions
Contributions to a traditional IRA may be fully or partially deductible depending on your income and retirement coverage. The limit is $7,000 in 2025 ($8,000 if age 50 or older).
8. Health Savings Account (HSA) Contributions
Contributions to an HSA are deductible if you have a high-deductible health plan (HDHP). Limits in 2025 are $4,150 for individuals and $8,300 for families, with a $1,000 catch-up for those 55 or older.
9. Self-Employment Expenses
If you’re self-employed, you can deduct expenses like home office costs, business insurance, professional services, and supplies.
10. Home Office Deduction
Self-employed individuals can deduct a portion of their rent, utilities, and other home expenses if a part of their home is used exclusively for business.
11. Retirement Plan Contributions for the Self-Employed
Contributions to SEP IRAs, SIMPLE IRAs, or Solo 401(k) plans can be deductible, reducing taxable income significantly.
12. Dependent Care Credit
This credit (not a deduction but still valuable) can reduce your tax for child and dependent care expenses while you work or look for work.
13. Job Search Expenses (if eligible)
While no longer deductible for most, job search expenses related to a new job in your same field might be deductible under specific conditions for self-employed individuals.
14. Gambling Losses
You can deduct gambling losses up to the amount of your gambling winnings if you itemize and maintain accurate records.
15. Investment Interest Expense
Interest paid on money borrowed to purchase investments can be deductible up to your net investment income.
16. Casualty and Theft Losses
Losses from federally declared disasters are deductible, though limits and documentation are required. Losses outside of federally declared areas are generally not deductible.
17. Mileage and Vehicle Expenses
Self-employed taxpayers can deduct vehicle use for business. For 2025, the standard mileage rate set by the IRS must be used unless you choose to deduct actual expenses.
18. Tax Preparation Fees
While personal tax prep fees are no longer deductible, if you’re self-employed, any tax services related to your business are deductible as a business expense.
19. Interest on Investment Property Loans
If you own rental properties, mortgage interest on the investment property is deductible against rental income.
20. Educator Tuition Deduction (Lifetime Learning Credit)
Taxpayers taking post-secondary courses to improve job skills may be eligible for up to $2,000 via the Lifetime Learning Credit, reducing your tax liability directly.
Bonus Tip: Use Tax-Loss Harvesting
Though not a deduction, selling investments at a loss to offset gains can effectively reduce taxable income. Up to $3,000 in capital losses can also offset ordinary income annually.
How These Deductions Affect Your Refund
Each of these deductions reduces your taxable income, and some may also directly reduce your tax liability via credits. The more you reduce your taxable income, the less tax you owe—and the greater the potential for a refund if you had taxes withheld or made estimated payments throughout the year.
Conclusion
Maximizing deductions is one of the most powerful tools you have for increasing your IRS refund in 2025. While not everyone will qualify for all of these, understanding and applying the ones that fit your financial situation can lead to substantial tax savings. To ensure you don’t miss any opportunities, it’s advisable to consult a tax professional or use a reliable tax filing platform that supports detailed deduction entry. Proactive planning now can translate into a bigger refund when it’s time to file.
