10 Tax Deductions You Might Be Missing in 2025

Tax season is approaching, and millions of Americans will leave money on the table by missing deductions they're entitled to claim. According to the IRS, the average taxpayer overpays by $500-$1,000 annually simply by not knowing what deductions exist.

Whether you're filing as an employee, freelancer, or small business owner, these 10 commonly overlooked deductions could significantly reduce your 2025 tax bill. Let's explore each one in detail.

1. Home Office Deduction

Who Can Claim: Self-employed individuals and freelancers

Potential Savings: $1,500-$3,000

If you work from home as a freelancer or run your own business, you can deduct expenses related to your home office. The space must be used regularly and exclusively for business purposes.

Important: W-2 employees cannot claim this deduction after 2017 tax law changes. It's now exclusive to self-employed individuals.

2. Student Loan Interest

Who Can Claim: Anyone repaying student loans

Potential Savings: Up to $625 (deduction up to $2,500)

You can deduct up to $2,500 of student loan interest paid during the year, even if you don't itemize. This is an "above-the-line" deduction that directly reduces your adjusted gross income (AGI).

Income Limits (2025):

• Single filers: Phases out between $75,000-$90,000 AGI
• Married filing jointly: Phases out between $155,000-$185,000 AGI

Pro Tip: Your loan servicer will send Form 1098-E showing the amount paid. Don't forget to claim this if you paid $600 or more in interest!

3. State Sales Tax (for No-Income-Tax States)

Who Can Claim: Residents of states without income tax

Potential Savings: $500-$2,000

If you live in a state without income tax (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming), you can deduct state and local sales tax instead of state income tax when itemizing.

Two Methods:

1. Actual Expenses: Save all receipts and deduct actual sales tax paid
2. IRS Tables: Use IRS-provided tables based on your income, family size, and state

Bonus: You can add sales tax from major purchases (car, boat, home improvement materials) to the table amount.

4. Job Search Expenses

Who Can Claim: Self-employed seeking new clients/contracts

Potential Savings: $500-$1,500

While W-2 employees can no longer deduct job search costs, self-employed individuals can deduct expenses related to finding new business:

• Resume/portfolio services
• Career coaching and professional development
• Networking event fees
• Travel to meet potential clients
• LinkedIn Premium and job board subscriptions

Important: The search must be in your current field or line of business.

5. Charitable Mileage

Who Can Claim: Volunteers for qualified charities

Potential Savings: $100-$300

Most people know about cash donations, but did you know you can deduct mileage for volunteer work? The IRS allows 14 cents per mile for charitable driving in 2025.

Qualifying Activities:

• Driving to volunteer at a soup kitchen
• Taking supplies to a charity
• Transportation for Meals on Wheels deliveries
• Driving to fundraising events as a volunteer

Record Keeping: Log dates, miles driven, and purpose of trips. This adds up faster than you think!

6. Health Savings Account (HSA) Contributions

Who Can Claim: Anyone with a high-deductible health plan

Potential Savings: $1,000-$2,000

HSA contributions are one of the most tax-advantaged accounts available. Contributions are tax-deductible, growth is tax-free, and withdrawals for medical expenses are tax-free (triple tax advantage).

2025 Contribution Limits:

• Individual coverage: $4,300
• Family coverage: $8,550
• Additional catch-up (55+): $1,000

Pro Tip: You have until April 15, 2026, to make 2025 HSA contributions. If you haven't maxed it out, contribute before filing your taxes!

7. Educator Expenses

Who Can Claim: K-12 teachers and educators

Potential Savings: Up to $75 (deduction up to $300)

Teachers who pay out-of-pocket for classroom supplies can deduct up to $300 ($600 for married couples both teaching). This is an above-the-line deduction—no itemizing required.

Qualifying Expenses:

• Books and classroom supplies
• Computer equipment and software
• COVID-19 protective items
• Athletic supplies for PE teachers
• Professional development courses

8. Self-Employment Tax Deduction

Who Can Claim: Self-employed individuals and freelancers

Potential Savings: $1,000-$5,000

When you're self-employed, you pay both the employee and employer portions of Social Security and Medicare taxes (15.3% total). The good news? You can deduct the employer portion (half) on your tax return.

Example:

Important: This is calculated automatically on Schedule SE and transferred to Form 1040. Don't miss it!

9. Moving Expenses (Military Only)

Who Can Claim: Active-duty military members

Potential Savings: $1,000-$3,000

While the moving expense deduction was eliminated for most taxpayers in 2017, active-duty military members moving due to a permanent change of station can still claim it.

Deductible Expenses:

• Transportation and storage of household goods
• Travel expenses (lodging, but not meals)
• Mileage (16 cents per mile for 2025)

10. State Tax Refund (if you itemized last year)

Who Can Claim: Those who itemized and received a state tax refund

Why It Matters: Avoid double-dipping

This is a reverse deduction. If you itemized deductions last year and claimed state/local taxes, then received a state tax refund this year, you may need to report that refund as income. It's commonly overlooked because it seems counterintuitive.

When to Report: Only if you benefited from the deduction last year (i.e., you itemized and it reduced your tax bill).

Conclusion: Don't Leave Money on the Table

These 10 deductions could save you anywhere from $3,000 to $10,000 depending on your situation. The key is being proactive—track expenses throughout the year, not just at tax time.

Before filing your 2025 return, review this list carefully. Consult with a tax professional if you're unsure whether you qualify for any of these deductions. The cost of professional advice is usually far less than the money you'll save by claiming everything you're entitled to.