Top 5 Tax Deductions for 2024: Essential Guide for Tax Season
Tax season is upon us, and a key strategy is to discover and utilize available tax deductions. Deductions enable taxpayers to lower their taxable income, which reduces the total taxes owed.
The majority of individuals opt for the standard deduction, which for the year 2024 is set at $14,600 for single filers or those married filing separately, $29,200 for married couples filing jointly or for qualifying surviving spouses, and $21,900 for heads of household.
Yet, there are several lesser-known deductions that taxpayers can take advantage of.
Here are five noteworthy examples:
Charitable Donations Deduction
Many taxpayers claim deductions for their charitable contributions, although the rules governing these deductions can be intricate.
As per the IRS, taxpayers can deduct charitable donations only if they itemize their deductions. Gifts to individuals are not deductible, and the organizations receiving donations must be IRS-qualified.
If a donor receives any form of benefit—such as “merchandise, goods, or services, including admission to charity events like balls, banquets, theatrical performances, or sports events”—only the amount that “exceeds the fair market value” of that benefit is deductible.
To qualify for this deduction, any contribution exceeding $250 requires a “contemporaneous written acknowledgment.”
Deduction for Student Loan Interest
During President Biden’s tenure, there was significant political debate regarding plans for student loan forgiveness. Although some initiatives were challenged in court, the IRS continues to offer a deduction for student loan interest.
The IRS defines student loan interest as “interest you paid during the year on a qualified student loan.”
Taxpayers can deduct up to $2,500 or the “amount of interest actually paid during the year,” whichever is lower.
This deduction does not require itemization.
State and Local Tax (SALT) Deduction
In the realm of politics, the SALT deduction cap remains a point of contention in federal budget discussions, with several lawmakers from high-tax states advocating for an increase in the cap and threatening to oppose budget resolutions that do not address their demands.
Currently, the SALT deduction is capped at $10,000, or $5,000 for those married filing separately. During last year’s campaign, Trump promised to abolish the cap; however, one supporter has suggested merely raising the limit to $20,000.
Home Office Deduction
Individuals who operate a business from their home may be able to deduct expenses related to “the portion of your home used for business purposes.”
For eligibility, the home must be used as the “principal place of business” for their trade or business, for holding meetings, storage, rental, or as a daycare facility.
Deduction for Gambling Losses
With the recent legalization of sports gambling across much of the country, record-keeping for gambling wins and losses has become an essential aspect of tax planning.
Taxpayers are required to report gambling winnings but may also deduct their losses, provided they itemize those deductions and maintain accurate records of their gambling activities.
Will the IRS Be Able to Keep Up?
The pressing question remains whether the IRS will be equipped to efficiently process the influx of tax returns.
According to The New York Times, the Trump Administration has already laid off 7,000 IRS employees, with further reductions expected, potentially resulting in the loss of “up to half of its 100,000-person workforce.”
This tax season, and likely in the years to come, taxpayers might experience delays in receiving refunds—especially if issues with their complex tax returns require thorough attention from IRS staff.
About the Author: Stephen Silver
Stephen Silver is an award-winning journalist, essayist, and film critic, contributing to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review, and Splice Today. A co-founder of the Philadelphia Film Critics Circle, he resides in suburban Philadelphia with his wife and two sons. Over the past decade, Stephen has penned thousands of articles focusing on politics, technology, and the economy. Follow him on X (formerly Twitter) at @StephenSilver, and subscribe to his Substack newsletter.
