What is a Tax Write-Off? (Tax Deductions Explained)

Tax write-offs, also known as deductions, reduce taxable income. By lowering your taxable income, you can reduce how much you owe.

Deductions are different from tax credits. Tax credits directly cut your tax bill by reducing the actual taxes owed. However, both work to reduce your tax liability.

This guide will cover the basics of how write-offs work. We’ll discuss how write-offs work and how you can leverage the deductions you qualify for to maximize your savings.

Tax news: What are the most recent changes to tax write-offs?

Looking for the latest updates on write-offs? The One Big, Beautiful Bill permanently extends the standard deduction, which nearly doubled with the Tax Cuts and Jobs Act (TCJA). The Qualified Business Income Deduction was also permanently increased. And the SALT deduction has temporarily been increased through 2029.

Additionally, temporary deductions were added for car loan interest, as well as deductions for tips and overtime pay for tax years 2025 through 2028.

Key takeaways

• A tax write-off is an expense you can claim to reduce your taxable income and help lower your tax bill.
• The value of tax write-offs is dependent on the specific deduction you’re trying to claim and may vary depending on your filing status and income.
• For individuals, some common tax write-offs include medical expenses, donations, mortgage interest, and traditional IRA contributions.
• Businesses and self-employed individuals are allowed to write off certain business expenses, including home office, internet, and payroll costs.

What is a tax write-off?

A tax write-off, also known as a tax deduction, is a legitimate expense that can be claimed as a deduction and, in turn, lowers your taxable income.

How does a tax write-off work?

Write-offs are expenses that you’re eligible to deduct on your individual taxes. These items result in a reduction in your personal taxable income. When you’re self-employed and have your own business, you can write off expenses directly related to conducting your business.

The Internal Revenue Service (IRS) is responsible for administering and collecting taxes. When you file your tax return, the IRS uses your reported income minus your tax deductions (or tax write-offs) to determine what tax bracket you’re in and the tax rate your taxable income will be taxed. A tax bracket is applied to an income range.

For example, let’s say when you file your taxes, your reported income is $50,000. With the standard deduction ($15,750 single for 2025, $14,600 single for 2024), your adjusted gross income would be $34,250 for 2025, or $35,400 for 2024. The standard deduction will lower your reported income and, in turn, lower your taxable income and your tax rate.

What are standard and itemized deductions?

Standard and itemized deductions are two write-off options used to reduce your adjusted gross income (AGI), which is then used to determine your taxable income. The standard deduction is a fixed number that is based on your filing status, while itemized deductions are individual expenses you can claim if your qualifying write-offs exceed the standard deduction.

Typically, the type of deduction used will vary from year to year based upon the highest overall tax benefit provided by each deduction. Only one method can be used in any given year. The best option is to use the deduction that results in the lowest AGI.

The standard deduction is typically considered the default, unless you have a lot of large expenses you can write off. For the 2025 tax year, the standard deduction is:

• $15,750 for single taxpayers and married individuals filing separately
• $31,500 for married couples filing jointly
• $23,625 for individuals filing as head of household

As of July 4, 2025, the One Big, Beautiful Bill (OBBB) has permanently extended the increase in the standard deduction, which was nearly doubled by the Tax Cuts and Jobs Act (TCJA) of 2017, meaning more taxpayers can simplify the filing process by claiming the standard deduction.

Some popular itemized deductions include:

• Some popular itemized deductions include:
• Property taxes and state income taxes
• Mortgage interest
• Medical expenses
• Charitable contributions

When itemizing deductions, you’ll want to take any write-offs that you’re eligible for to maximize your tax savings.

What’s the difference between a tax deduction and a tax credit?

Unlike tax deductions, tax credits are a dollar-for-dollar reduction of the taxes you owe. For example, a $100 credit reduces your tax liability dollar-for-dollar by $100. On the other hand, a deduction reduces your taxable income by $100. The resulting amount of tax you save depends on your tax bracket.

If you were in the 24% tax bracket, a $100 deduction would reduce your taxes by $24. On the other hand, a $100 credit would reduce your taxes by $100. Common credits include the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Credit.

Generally, the majority of deductions and credits that can be claimed phase out at higher incomes. The IRS determines what expenses can be considered legitimate write-offs.

How much are tax write-offs worth?

The amount that a tax write-off is worth depends on several factors surrounding the deduction or credit, including limits, which are prescribed by the tax provisions. These limits can depend on several factors, such as:

• Filing status
• Income
• Dependents

Generally, the amount you can write off may be limited based on your adjusted gross income. An example of this is the student loan interest deduction, which begins to phase out when income exceeds $85,000 as a single person or $170,000 for couples who are married filing jointly, $80,000 or $165,000 for 2024.

In some cases, it’s possible that taking the tax write-off would not be to your benefit. For example, if your total itemized deductions are less than the standard deduction amount for your filing status, it would be in your best interest to choose the standard deduction.
Fortunately, when you file with TurboTax, the guessing game is eliminated, and the option that benefits you the most (standard deductions versus itemized) will be chosen based on your entries.

What is the benefit of a tax-write off?

The best benefit from a tax-write off is the reduction of your taxable income, which in turn lowers the taxes you have to pay.

Who can write-off expenses on their income taxes?

Individuals, self-employed, small businesses, and corporations can write-off expenses on their taxes. 

What are some common tax write-offs for individuals?  

While everyone won’t qualify for every tax write-off, here is a list of some common tax write-offs:

• Standard deduction: A standard deduction is a deduction that is a specific dollar amount that reduces your taxable income. For tax year 2025, the standard deduction is $15,750 for single filers and $31,500 for those married filing jointly ($14,600 for single filers and $29,200 for those married filing jointly in 2024).
• Mortgage interest: You can write off the interest you pay on the first $750,000 of home loans on homes purchased after December 15, 2017. For mortgages that existed as of December 14, 2017, the maximum mortgage interest deduction allowed is based on a loan amount of up to $1 million.
• Student loan interest: If you made payments on a qualified student loan in 2025 and have a modified adjusted gross income (MAGI) under $85,000 as a single or head of household filer or $170,000 as married filing jointly ($80,000 as a single or head of household filer or $165,000 as married filing jointly for 2024) you can write off up to $2,500 of interest paid on the student loans.
• Car loan interest: Established by the One Big, Beautiful Bill, you may be able to write off up to $10,000 in car loan interest per year, for tax years 2025-2028. This deduction only applies to qualified auto loans and personal-use vehicles that were assembled in the US.
• Donations to charities: If you made contributions to qualified 501(c)3 organizations, you may qualify for a write-off if you itemize your deduction.  Starting in 2026, you may be entitled to a $1,000 deduction per taxpayer if you take the standard deduction.
• Medical and dental expenses: If you can itemize your deductions and your unreimbursed medical and dental expenses exceed 7.5% of your adjusted gross income, you may qualify to deduct those costs as medical expenses.
• Traditional IRA contributions: If you made contributions to your traditional IRA and have a MAGI under a certain limit, you may qualify to write off contributions up to $7,000 if you’re under age 50 (or $8,000 if you’re age 50 or older). You’re able to make a contribution up until the tax deadline and reduce your taxable income for the tax year.
• Health savings account (HSA) contributions: If you qualify to contribute to an HSA, you can write off contributions that you made to the account. For tax year 2025, you can contribute up to $4,300 for an individual or up to $8,550 for a family ($4,150 for an individual or up to $8,300 for a family for 2024).
• State and Local Tax Deduction (SALT): The SALT deduction allows federal taxpayers who are itemizing to deduct state and local income taxes, or state and local sales taxes, as well as property taxes. With the passing of the One Big, Beautiful Bill, the cap for the SALT deduction has increased from $10,000 to $40,000 for income of up to $500,000. The deduction phases out for taxpayers with income over $500,000.
• Qualified overtime and tips: If you earn tips or overtime, you might be eligible for new write-offs. The One Big, Beautiful Bill created a provision for a temporary deduction on tips and overtime pay. For tax years 2025 through 2028, you can write off up to $25,000 for tips and $12,500 ($25,000 if married filing jointly) for overtime. Both of these deductions phase out for taxpayers with income over $150,000 ($300,000 for those married filing jointly).

What are some popular tax write-offs for self-employed individuals?

As a sole proprietor, you may also be eligible for the Qualified Business Income Deduction. This deduction, which also applies to certain K-1 income, has been made permanent by the One Big, Beautiful Bill.

You can also deduct the full expense of business equipment up to $1,250,000 for the tax year 2025. In some cases, certain SUV heavy vehicles used for your business also qualify. If you placed a qualified sports utility vehicle in service, you may be able to deduct up to $31,300 for 2025 ($30,500 for 2024).

Many self-employed taxpayers think that if they set their business up as a corporation or another type of business structure, they may get more tax write-offs than if they are set up as a sole proprietor; but this is a myth. If you’re self-employed, you can take many of the same business tax deductions as corporations, which lowers your taxable self-employment income.

If you’re self-employed, you may not know all of the different business deductions you’re eligible for, but TurboTax Premium will search tax deductions specific to your industry.

You can also easily track your business income, expenses, and mileage year-round with QuickBooks Self-Employed and easily import the information directly to your TurboTax tax return at tax-time.

What are some common tax write-offs for small businesses?

If you’re considered a small business with employees, you will be able to deduct business expenses related to your employees, like payroll expenses and other expenses directly related to running your business.

Note: Businesses can be classified as small businesses based on revenue, sales, assets, annual gross profits, net profits, or the number of employees the business employs.

As a small business owner, it’s essential to keep good records of your business income and expenses so you don’t miss out on any write-offs.

QuickBooks can help you manage your business finances in one place to make sure you’re prepared come tax time. Some common tax write-offs for small businesses include:

• Rent expenses
• Telephone and internet expenses
• Bank fees
• Contract labor

Each business will have some expenses that are specific to its business or industry that can be deducted as a tax write-off.

What are some common tax write-offs for corporations?

Corporations are allowed to deduct business expenses that the IRS defines as “ordinary and necessary” business expenses. There are two types of business expenses: current expenses and capital expenses.

• Current expenses are expenses needed to keep the corporation running and are fully tax-deductible.
• Capital expenses are items such as investments, large equipment purchases, or real estate that also qualify for deductions if purchased to generate income from the business.

Ultimately, the IRS tax code determines what a business qualifies to deduct.

A normal business deduction for all businesses are operating expenses that the business relies on to operate on a day-to-day basis, such as:

• Rent
• Office supplies
• Payroll expenses

Another customary business deduction for a corporation is employee expenses, such as:

• Employer-sponsored health benefits
• Tuition reimbursement
• Bonuses
• Awards
• Sick leave
• Employee salaries

What are some non-deductible expenses?

Some common expenses that you can’t deduct include:

• Child support 
• Alimony paid on divorce agreements entered into after Dec. 31, 2018 
• Political contributions 
• 529 contributions (no federal deduction, but it may be deductible on a state tax return) 
• Roth IRA contributions

It’s normal to have yearly expenses that don’t qualify as a non-deductible tax write-off. Also, it’s possible that an expense can be legitimate, but not deductible on your taxes.

What are some situational tax deductions?

Below are some expenses that can be deductible, but they come with specific conditions:

• Home office deduction: This deduction is a portion of your home expenses, like rent or mortgage interest, property taxes, and utilities, based on the square footage of space in your home you use exclusively for your home office for your self-employed business. The IRS also allows you to use the simplified home office deduction, which is up to $1,500 (up to 300 square feet at $5 per square foot), depending on how much space you use in your home. If you have a  space in your home that you use regularly and exclusively to conduct business, you should not hesitate to claim the home office deduction.
• Home office computer: If this is the only computer in your household, you will need to calculate the percentage of time that you use the computer solely for business purposes.
• Uniforms or costumes: If your costume or uniform is something you could wear outside your job, you shouldn’t write it off. If, however, it’s obvious you can only wear it for the duties of your specific job, then it qualifies as a write-off if you’re self-employed.

Are the same deductions offered every year?

While some tax deductions may stay the same from year to year, others can change due to updates in tax regulations or the economy. For any given tax year:

• New deductions can be introduced
• Existing deductions can be modified
• Certain deductions might be removed

How can you maximize your tax deductions?

Optimizing your tax deductions requires strategic planning, organization, and knowledge of eligible expenses.

When you prepare your tax return, be sure to keep good records.  This will help you determine which type of deduction works best for your specific circumstances.  For example, if you own a home or make significant charitable contributions during the year, you might benefit from itemizing your deductions.

It’s important to note tax deductions can include many activities. You might be better off claiming the standard deduction if you don’t have significant itemized deductions. 

On the other hand, you might choose to itemize deductions to maximize your potential savings. When itemizing, you can proactively plan for additional expenses in the upcoming year.

During the years that you’re planning to itemize, explore all deduction opportunities, including those for:

• Homeownership
• Medical costs
• Charitable donations

Additionally, be aware of commonly overlooked deductions and credits that may apply to your situation. You might have the opportunity to benefit from unexpected costs like:

• Health insurance
• Investments in retirement accounts
• Student loan interest

One strategy to maximize your tax deductions includes keeping organized records of all your eligible costs. During the year, maintain copies of large and small expenses so you have them ready come tax time. This ensures you do not miss out on any eligible tax deductions.

Lower your tax liability by leveraging write-offs

Reduce the financial stress of tax season by leveraging the power of deductions. By lowering your taxable income, deductions unlock opportunities to save money–who wouldn’t want that?

It’s good to have a basic understanding of the rules. That said, we make it easy to figure out if you qualify for deductions when you use TurboTax. No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.