Take Advantage of Commonly Overlooked Tax Deductions
By Net Worth Advisory Group
For many people, the goal during tax season is simply to get it done without mistakes. It’s easy to fall into the habit of claiming only the standard deductions and familiar credits. But a closer look at often-overlooked tax breaks can meaningfully reduce your liability and even open up new opportunities to optimize your finances.
Here are several deductions and credits that are frequently missed that may apply to you. Taking a thoughtful approach now can help you keep more of your hard-earned money and approach tax season with confidence.
Tax Deductibles vs. Tax Credits
Tax deductions reduce the amount of taxable income you incur before taxes are assessed. With the right deductions, you could potentially move into a lower tax bracket.
By contrast, tax credits apply after your liability has been calculated, reducing your overall tax bill. Credits are based on income, expenses, and other factors. Every credit dollar reduces your tax bill by the same amount. Credits are generally better than deductions.
Wealthy, high-income taxpayers may benefit more from deductions, while lower-income families may earn more from credits. While credits are generally better than deductions, shrewd taxpayers take advantage of both.
State and Local Tax Deductions
The breaks most taxpayers ignore involve the imposition of state sales taxes. With the wild variance of tax laws from state to state, it’s easy to see how they get missed. However, they can add up.
States Without Income Tax
Taxpayers in states without income tax may be able to deduct major purchases up to the limits outlined by the IRS. Alternatively, they can track their sales tax incurred last year and base their deductions on those.
States With Income Tax
Taxpayers in states that charge income tax also must choose between those two structures (income vs. sales taxes). However, the income tax option is usually best. Under the OBBBA tax legislation, you can deduct up to $40,000 of combined property taxes and income or sales taxes. For high-income earners, the maximum is reduced above $500,000 MAGI and falls back to $10,000 once MAGI reaches $600,000.
Individual and Home-Based Tax Deductions and Credits
Many of the best opportunities for saving on taxes are centered around life and home. The following are some of the more overlooked or forgotten breaks.
Mortgage Interest Reduction
As of the 2025 tax year, homeowners who itemize their deductions can continue to deduct mortgage interest on loans up to $750,000. However, the deduction for mortgage insurance premiums expired after the 2021 tax year and is no longer available.
Note that the $750,000 limit on deductible mortgage debt was established by the Tax Cuts and Jobs Act (TCJA). Higher limitations ($1 million ($500,000 if married filing separately)) apply if you are deducting mortgage interest from indebtedness incurred before December 16, 2017.
Renewable Energy Credits
Homeowners switching to renewable energy sources can write off certain expenses. You may be able to take up to 30% of the installation costs for installing solar panels, water heaters, or HVAC systems up to a maximum of $3,200. You may also get a non-refundable credit for a new electric vehicle if it meets IRS guidelines and the vehicle was purchased prior to September 30th, 2025 (credit amounts range from $4,000–$7,500). These credits will expire after 2025.
Saver’s Credit
The saver’s credit helps low-to-medium-income taxpayers contribute to an IRA, 401(k), 403(b), and certain other retirement funds. The credit maximums are $1,000 for each individual or $2,000 for those married filing jointly.
Charitable Contributions
If you itemize your deductions or donate to a charity via certain approved strategies, then you may be able to deduct the total from your taxable income. Note: charitable contribution tax rules will change considerably in 2026; it’s smart to know these changes ahead of time for both 2025 and 2026 tax planning.
Education Deductions
The IRS facilitates continuing education with several learning tax credits:
- American opportunity tax credits: Students can claim the first $2,000 spent (and 25 percent of the next $2,000) on approved educational expenses, such as tuition, books, and school fees.
- Lifetime learning credit: The lifetime learning credit helps post-graduates continue their education. They can claim 20% of the first $10,000 spent on expenses, to a maximum of $2,000.
- Student loan interest: Taxpayers repaying their student loans can deduct the amount they paid in interest over the last year. The maximum you can claim in 2025 is $2,500 and there are income caps to claim the deduction.
Business Tax Deductions
Business owners and self-employed individuals have numerous options for reducing their tax bills.
Self-Employed Expense Deductions
Self-employed individuals can write off select expenses, such as continuing education, retirement savings, mileage reimbursement, and certain kinds of health insurance. Those working out of residences may qualify for home-office deductions as well.
Small Business Owner Tax Deductions
Some of the most helpful deductions for small business owners in 2025 include:
- Qualified business income deductions
- Research and development tax credits
- Family and medical leave credit
- Section 179 expenses, such as equipment and machinery
Check with your accountant to verify you’re taking advantage of all applicable breaks.
Healthcare and Medical Deductions
You might qualify for certain expenses related to healthcare and medicine, including the following:
- Medical expense deductions: If you itemize deductions, you may qualify to have certain medical expenses subtracted from your taxable income. Expenses must surpass 7.5% of your adjusted gross income (AGI)
- HSA contribution deductions: If you’ve opened and contributed to a health savings account (HSA), those contributions may be tax-deductible against your ordinary income.
Uncover More Hidden Tax Deductions and Credits
These are just a few of the tax deductions, credits, and breaks that often go unnoticed. Your unique situation may qualify for even more, so it’s always a good idea to check the latest IRS guidance or speak with a tax professional.
Want to review your current financial plan or talk through investment questions? Our team at Net Worth Advisory Group would love to help. Call us at 801-566-6639 or schedule a complimentary, no-obligation consultation to see if we are a good fit to help you pursue your goals.
To learn more, visit our website.
About Net Worth Advisory Group
Founded in 2003, Net Worth Advisory Group is an independent, fee-only, CERTIFIED FINANCIAL PLANNER® and investment advisory firm located in Salt Lake City, Utah. We specialize in helping people transition from the workplace into retirement and ensuring that those who are already retired will not outlive their nest egg. Our top priority is to have clients experience a greater sense of ease with diligent, personalized wealth care and the implementation of customized financial plans and ongoing personalized asset management. We equip all clients with a comprehensive financial plan, meeting every six months to update as needed and review investment performance. Our team is passionate about providing comprehensive financial planning with the fee-only model, and we love feeling like we’re making a difference in our clients’ financial lives.
As a NAPFA-registered fee-only advisory firm, our recommendations are untainted by a hidden agenda to sell financial products paying large commissions. Unlike our competitors at brokerage firms, insurance companies, and banks, we are compensated solely by our clients, so we are financially motivated to provide objective advice that is always in our clients’ best interests. Anyone can call himself or herself a financial planner, but only an advisor with the CERTIFIED FINANCIAL PLANNER®, CFP® designation has met the education, examination, experience, and ethical requirements mandated by the CFP® board. According to the CFP Board, there are 97,000+ CFP® professionals in 2023, representing about 1 in 3 financial advisors in the U.S. Net Worth advisors are also members of NAPFA, which only has about 4,600 advisors, and are either CFP® professionals or CFP® professionals in training.
Net Worth Advisory Group’s mission is to significantly improve the lives of our clients by delivering exemplary financial planning and wealth management advice that enables them to live the lives they have imagined.
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