Top 10 Tax Deductions You’re Probably Missing in 2026

Millions of Americans will see a lower tax bill next year, thanks to the so-called “Big Beautiful Bill” that President Trump signed into law on July 4. The new legislation preserves and expands many of the provisions of the 2017 Tax Cuts and Jobs Act.

Tax deductions, also called tax write-offs, help decrease your taxable income. But the share of taxpayers who itemize has dropped since pre-TCJA, due to higher standard deductions and limits on certain itemized deductions.

1. Mortgage Interest Deduction

The mortgage interest deduction is a valuable tax break for many homeowners. It allows you to deduct the interest you pay on your primary and qualifying second homes. It also covers home equity lines of credit and loans for a home under construction or sold up to — but not including — the date of sale.

To qualify, a debt must be secured by a qualified residence, which the IRS defines as a house, co-op, condo, mobile home, manufactured housing, boat or recreational vehicle that has sleeping, cooking and toilet facilities. See IRS Publication 936 for details.

2. Medical Expenses Deduction

The medical expense deduction allows taxpayers to deduct unreimbursed medical expenses that exceed 7.5% of their adjusted gross income. However, to claim this deduction, you must itemize your deductions using Schedule A on Form 1040 and be sure to keep accurate receipts and records.

Eligible expenses include prescription medications, insulin, over-the-counter products like hand sanitizers and face masks, and fertility treatments, among others. You can also deduct transportation costs for medical care and meals and lodging while traveling to get treatment. This deduction can add up to significant savings for many families.

3. Child Tax Credit

The Child Tax Credit helps families with qualifying children offset a portion of their taxes, directly relieving financial burdens and giving them peace of mind. Up to $2,000 per qualifying child under age 17 may be claimed, and up to $1,700 of the credit is refundable, even when no income tax is owed.

To qualify, a child must meet certain age and residency tests and have a valid Social Security number. Enhanced provisions from the American Rescue Plan Act are now permanent, and the credit is indexed for inflation beginning in 2026.

4. Energy Efficient Home Improvement Tax Credit

Homeowners can claim a credit on energy-saving improvements to their primary residence. This credit covers 30% of the cost of certain qualifying improvements. Examples include: exterior doors; windows or skylights; insulation materials; central air conditioners; electric panels and related equipment; biomass stoves and boilers, and energy audits.

You may only claim this credit for expenses for your primary home, which is generally where you live most of the time. This credit is nonrefundable and cannot exceed the amount of tax you owe for that year. This credit is set to expire for property placed in service by December 31, 2025.

5. Car Loan Interest Deduction

A temporary new tax break was included in the One Big Beautiful Bill passed this summer and signed by President Trump on July 4. It allows individuals who itemize to deduct the interest paid on a personal vehicle loan. Vehicles must be new and have undergone final assembly in the United States to qualify.

However, many households don’t pay close to $10,000 in car loan interest annually, and the deduction is subject to income limits. A few well-off families might see substantial savings from the new deduction.

6. State and Local Tax Deduction

The state and local tax deduction (SALT) allows households that itemize to reduce their federal income taxes by deducting property, sales, or income taxes levied by state and local governments.

It’s a key deduction for residents of high-tax states such as New York and California.

But the 2017 Tax Cuts and Jobs Act put a $10,000 cap on the amount of SALT taxpayers can claim, effectively limiting the deduction to fewer filers.

7. Charitable Contributions Deduction

Signed into law in July, the One Big Beautiful Bill Act introduces changes that reshape charitable giving incentives for both itemizers and non-itemizers. These updates may require thoughtful consideration in year-end planning and future funding strategies.

The top bracket sees the value of their charitable deduction capped at 35%, which is a slight haircut on the tax savings for each deductible dollar given. This could have a significant impact on high-net-worth donors.

A new 0.5% of taxable income floor on the charitable deduction may drive more donors to bundling gifts together in order to surpass the floor.

8. Business Expenses Deduction

Business expenses are costs that a company incurs in the ordinary course of its operation and can be subtracted from revenue to arrive at taxable net income. They are generally categorized as either capital expenditures or operational expenditures.

Expenses that fall into the operating expense category include rent or mortgage payments, office supplies, and software subscriptions. Service-based businesses might write off meal expenses for business meetings or client outreach and a wide range of professional fees like legal services and tax advice. In addition, many taxes a company pays, including property and payroll taxes, are deductible.

9. Unreimbursed Employee Expenses Deduction

Currently, the Tax Cuts and Jobs Act has suspended this type of itemized deduction until 2025. But, if you qualify, you can still write-off expenses like union dues and work uniforms. Additionally, the Act allows teachers, instructors, counselors, and aides that spend more than 900 hours working in schools to deduct unreimbursed employee expenses.

Likewise, the OBBBA allows nonitemizers to deduct cash charitable donations up to $1,000. You can learn more about this new above-the-line deduction in IRS Publication 529.

10. Any 2026 Updates

For 2026, the TCJA makes tips and overtime tax free, temporarily boosts the standard deduction for non-itemizers and limits itemized deductions for top bracket taxpayers. The average household would see a tax cut of about $2,900, though high-income households get the biggest cuts in dollars and as a share of after-tax income.

Mark Steber is Jackson Hewitt’s senior vice president of consumer taxes, overseeing service delivery, quality assurance and tax law adherence. Find a Jackson Hewitt Tax Pro near you today.