Roadmap: The 10 Commonly Missed Deductions for 2025 and How to Use This Guide

Every filing season, valuable deductions hide in plain sight like spare change beneath a sofa cushion. The trick is knowing where to look and how to document what you find. This guide highlights ten deductions individual filers and small business owners commonly overlook on their 2025 returns. It begins with a quick outline so you can scan for relevance, then dives deep into rules, edge cases, and practical record-keeping habits. Two grounding truths set the stage: first, you only benefit from itemized deductions if they exceed your standard deduction; second, several high-impact deductions reduce income even if you don’t itemize, which makes them accessible to a wide range of filers.

Here is the quick outline of deductions this article expands on:

– State and local taxes (choosing income tax or sales tax under the SALT cap)
– Charitable contributions (especially non-cash, appreciated assets, and carryforwards)
– Medical and dental expenses above 7.5% of adjusted gross income (including travel and certain premiums)
– Mortgage interest and points, plus rules for home equity interest used to improve your home
– Educator expenses (above-the-line deduction for eligible classroom spending)
– Student loan interest deduction (subject to income thresholds and eligibility)
– Health Savings Account contributions (deductible even without itemizing)
– Self-employed deductions (home office, half of self-employment tax, health insurance, retirement)
– Investment interest expense (limited to net investment income)
– Capital loss deduction and carryforward rules

Before you begin, consider a simple decision tree: will you itemize or take the standard deduction? If you itemize, focus on state and local taxes, charitable giving, medical costs, and home-related deductions. If you won’t itemize, concentrate on adjustments to income (educator expenses, student loan interest, HSA contributions, self-employed deductions) and investment loss rules that operate outside Schedule A. Keep thorough records to safeguard any claim:

– Receipts, statements, and date-stamped confirmations
– Mileage logs for medical and business travel
– Contemporaneous notes for non-cash donations and valuations
– Closing disclosures for points paid and home improvements

Finally, laws and thresholds can change. The state and local tax cap remains in effect through 2025, and the medical expense threshold continues at 7.5% of adjusted gross income. Numbers for mileage rates, certain educator caps, and age-based limits adjust annually, so verify the published figures when you file. With this groundwork, the sections ahead unpack each deduction with examples and comparisons to help you claim what you’re eligible for—no guesswork, no gimmicks.

SALT and Charitable Gifts: Two Itemized Heavyweights Many Filers Overlook

State and local taxes—often abbreviated as SALT—are a core itemized deduction, but a key choice is frequently missed: you can deduct either state and local income taxes or state and local general sales taxes. You cannot deduct both, and the total SALT deduction is capped, which is scheduled to remain in place through 2025. If you live in a place with low or no income tax, or if you made a large taxable purchase during the year, opting for sales tax can be more valuable than income tax. People often default to claiming income tax withheld on their paychecks, leaving sales tax benefits unused.

Practical comparisons help decide: a taxpayer in a no-income-tax state who bought a new or used vehicle may tip the scale toward the sales tax election. A family that remodeled a kitchen and purchased major appliances can also benefit from claiming sales tax, especially if their income tax burden is modest. Conversely, a professional in a high-income-tax state with limited major purchases usually gains from deducting income tax instead. Many tax agencies publish a table-based method for estimating sales tax based on income and household size, and you may add actual tax paid on large purchases to that estimate.

Documentation matters. Save year-end state withholding data, estimated tax payment confirmations, and, if you elect sales tax, invoices for large purchases. If you reshuffle your SALT strategy, consider adjacent costs that remain nondeductible, such as fees or excise taxes. Also remember that total SALT deductions are subject to the statutory cap, so it’s worth modeling both paths under that limit.

Charitable contributions are another area where value slips away, particularly with non-cash donations. Many filers correctly report cash gifts but overlook donations of clothing, furniture, or appreciated securities. Why it matters: donating appreciated investments held more than one year can allow a deduction equal to fair market value while you avoid realizing the embedded gain, subject to percentage limits relative to adjusted gross income. If your charitable giving was unusually high this year, monitor the applicable AGI limits; excess amounts often carry forward up to five years and can reduce future taxable income.

Three practical guardrails keep this deduction intact:
– Substantiate gifts of $250 or more with a contemporaneous acknowledgment stating the amount and whether you received any goods or services in return
– For non-cash donations exceeding certain thresholds, obtain a qualified appraisal and complete the required forms
– Track fair market value realistically; use thrift or resale value, not original cost

Example: A couple itemizes and hits the SALT cap quickly. They also donated a bedroom set and winter coats to a local charity, plus appreciated shares to a qualifying organization. By documenting the valuations and acknowledgments, they increase their Schedule A deduction materially—without any cash outlay beyond what they already gave.

Medical and Dental Expenses, Plus Home-Related Interest: Where Details Pay Off

Medical and dental deductions are allowed for unreimbursed expenses that exceed 7.5% of your adjusted gross income. This threshold means planning and documentation can make or break the benefit. Eligible costs include payments to licensed providers, prescription medications, certain long-term care premiums subject to age-based caps, and specific travel related to medical care. Many filers omit smaller, scattered costs that collectively push them over the threshold—think orthodontia in spring, specialist copays in fall, and surgery coinsurance in winter. When aggregated and tallied, these can yield a meaningful deduction.

Two commonly missed subcategories are transportation and lodging for necessary medical care. Miles driven to and from appointments can be deducted using the annually published medical mileage rate. Parking fees and tolls generally count as well. Limited lodging amounts for the patient and a supporting person may qualify when care requires travel away from home, provided there is no extravagant element. Keep a simple log:

– Date, destination, and purpose of visit
– Round-trip miles or actual fares if you used common carriers
– Receipts for parking, tolls, and lodging

A frequent pitfall is double-dipping with pre-tax accounts. If you paid an expense using a flexible spending account or a health savings account, you already received tax benefits and should not deduct those same dollars again. Conversely, if you paid out of pocket late in the year, evaluate whether accelerating or deferring certain expenses around the calendar boundary could push you above the 7.5% threshold in one year instead of spread across two.

Mortgage interest and points can also provide significant itemized deductions. Interest on acquisition debt—money used to buy, build, or substantially improve your primary or secondary residence—remains deductible up to statutory loan limits that depend on when the mortgage originated. Interest on home equity loans is only deductible when the funds are used to improve the property, not for personal expenses such as vacations or debt consolidation. Points paid to obtain a purchase mortgage are typically deductible in the year paid, while points on a refinance are usually amortized over the life of the loan unless used specifically for home improvements.

Example: A homeowner refinances mid-year and pays points, but also replaces a roof the following month using some refinance proceeds. They may be able to deduct a portion of the points immediately tied to the improvement and amortize the rest. Another homeowner who converted a room into a structurally integrated studio may deduct interest tied to that improvement, while interest on a cash-out used for unrelated spending remains nondeductible. Reviewing the closing disclosure and improvement invoices—and keeping them together—helps substantiate the proper allocation if ever questioned.

Educator Expenses, Student Loan Interest, and HSA Contributions: Above-the-Line Advantages

Several valuable deductions reduce your adjusted gross income directly, even if you do not itemize. Eligible educators—typically K–12 teachers, instructors, counselors, principals, and classroom aides who meet minimum hour requirements—may deduct a modest, annually published amount for classroom supplies and professional development. That cap is small, but it can be combined with other adjustments to deliver compounding benefits by lowering your AGI, which in turn can help you qualify for additional tax advantages elsewhere. Educators often overlook lab materials, books they keep in the classroom library, and safety items purchased out of pocket. Save receipts and note the date, supplier, and classroom purpose to make compliance effortless.

The student loan interest deduction allows qualifying taxpayers to deduct up to a set annual limit in interest paid on eligible education debt. You must be legally obligated to pay the interest, and you cannot be claimed as a dependent. Income phaseouts apply, so high earners may see the benefit reduced or eliminated, but many mid-income filers qualify and simply forget to claim it because their loan servicer statements arrive electronically and get lost in the digital shuffle. Don’t overlook timing: interest paid by year-end counts, while capitalized interest from prior forbearance periods is deductible only when actually paid.

Practical tips:
– Cross-check year-end statements for the total interest paid, not just current billing cycles
– If a relative helped with payments, ensure you meet the “legally obligated” requirement before claiming the deduction
– Keep a simple spreadsheet noting monthly interest components to reconcile with the annual figure

Health Savings Accounts (HSAs) are often described as having a triple tax advantage: contributions are deductible, growth is tax-deferred, and qualified medical withdrawals are tax-free. To contribute, you must be covered by a high-deductible health plan and meet other eligibility rules. Contributions can be made up to the tax filing deadline for the prior year, which offers flexibility if you want to top up after seeing your final numbers. Individuals age 55 or older typically qualify for catch-up contributions, and families have a higher annual cap than individuals. Because HSA deductions reduce AGI, they can indirectly boost other deductions that use AGI as a measuring stick, such as medical expense thresholds and certain phaseouts.

Example: A teacher who does not itemize claims the educator expense deduction, deducts student loan interest paid during the year, and contributes to an HSA in early April designated for the prior tax year. The combined effect lowers AGI, which then helps the filer qualify for other income-based opportunities. Each piece may be modest on its own; together, they create a meaningful reduction without relying on Schedule A.

Self-Employed Deductions, Investment Losses and Interest, QBI — Plus Final Takeaways

Self-employed taxpayers and side-hustlers routinely miss deductions that can materially change their liability. If you use part of your home regularly and exclusively for business, you may claim a home office deduction using either a simplified square-foot method or actual expenses allocated by business-use percentage. Track utilities, rent or mortgage interest, property taxes, insurance, and repairs, separating improvements (which are depreciated) from maintenance. Business mileage, independent contractor payments, software subscriptions, and supplies commonly go unclaimed when records are informal. You can also deduct one-half of your self-employment tax, which is an above-the-line adjustment, and many self-employed individuals qualify to deduct health insurance premiums paid for themselves and their families, subject to coordination rules with other coverage.

Retirement contributions for the self-employed are another often-missed lever. Depending on your structure and net earnings, contributions to certain small-business retirement plans can reduce taxable income materially, with deadlines that may extend to the tax filing date or even later if you extend your return. Spreading contributions across the year can smooth cash flow while ensuring you hit your targeted deduction by filing time. Keep a calendar of key cutoffs so you do not leave this deduction on the table.

Investors should pay close attention to two related areas. First, capital losses offset capital gains dollar-for-dollar, and up to a limited amount of net capital losses can offset ordinary income each year, with remaining losses carrying forward indefinitely. This rule is frequently underused by buy-and-hold investors who ignore unrealized losers entirely. Second, investment interest expense—interest paid on money borrowed to buy taxable investments—is deductible up to your net investment income, with any excess carrying forward. Coordination is critical: dividends from tax-advantaged accounts do not help with the investment interest limitation, so plan with taxable-account income in mind and keep broker statements handy to support the figures.

The qualified business income (QBI) deduction, available to many owners of sole proprietorships, partnerships, and S-corporation interests, can be up to 20% of qualified business income, subject to thresholds, wage and property tests, and exclusions for certain service categories above specific income levels. Even if you use a professional preparer, it pays to understand what counts as qualified business income, how to separate non-qualifying items like capital gains, and why accurate basis and depreciation schedules matter. Common misses include failing to aggregate businesses when allowed, or not considering whether a rental activity rises to the level of a trade or business for QBI purposes.

Documentation and Pitfalls: A Practical Checklist
– Maintain separate bank accounts for business activity to avoid commingling
– Keep contemporaneous logs for mileage, home office space changes, and hours spent on rental activities
– Reconcile year-end statements from lenders and investment firms to your records before filing
– Retain acknowledgments for charitable gifts and appraisals for non-cash donations
– Note carryforwards: capital losses, charitable excess, investment interest, and passive losses can all roll into future years when tracked carefully

Claiming With Confidence: Final Takeaways and Next Steps
– Start by deciding whether you will itemize; if not, emphasize adjustments like educator expenses, student loan interest, HSAs, and self-employed deductions
– If you itemize, compare income tax versus sales tax under SALT limits, tally medical expenses with travel, and revisit mortgage interest and points allocations
– Investors and business owners should map out QBI, capital losses, and investment interest before year-end to maximize outcomes lawfully
– When in doubt, capture the documentation now and verify exact annual thresholds published for the year you file

Conclusion for Filers: The ten deductions above are not exotic; they are simply easy to overlook when life is busy. By keeping simple records, modeling itemized versus standard outcomes, and coordinating timing across the calendar year, you can claim what the law allows with confidence. If your situation involves multiple trades, rentals, or large charitable gifts, a credentialed tax professional can help validate assumptions and surface additional opportunities. Either way, a deliberate approach turns missed write-offs into measurable savings.