9 Often-overlooked Tax Breaks You Don’t Want to Miss

To be eligible, your AGI in 2024 must have been $76,500 or less if you’re married filing jointly, $57,375 or less if you’re filing as head of household, or $38,250 or less if you’re a single filer. Depending on your income, the amount of the credit is 50 percent, 20 percent or 10 percent of contributions you made to a retirement savings account. The maximum contribution that qualifies for the credit is $2,000 for single filers or $4,000 for married couples filing jointly.

Health savings account contributions

Health savings account (HSA) contributions are tax-deductible up to a certain limit. You have until April 15, 2025, to make contributions to an HSA for 2024. To qualify for HSA contribution deductions, you must have had a health insurance plan with a deductible of at least $1,600 for self-only coverage or $3,200 for family coverage in 2024. 

The contribution limits for 2024 are $4,150 for individuals and $8,300 for family coverage. Those over 55 can make an additional $1,000 catch-up contribution. Bonus: “Earnings grow tax-free and can be used for qualified medical expenses without [tax] penalties," says Prudence Zhu, a CPA and founder of Phoenix-based financial planning firm Enso Financial.

If you are self-employed and funded your own HSA or made after-tax contributions to an HSA through an employer, you can claim a deduction for your contributions regardless of whether you itemize on your tax return.

Education expenses

If you took out student loans to help put your kids or grandkids through college, or for your own higher education, you might be able to deduct up to $2,500 of student loan interest you paid in 2024. Your modified AGI — your AGI from line 11 of your Form 1040, plus certain exclusions and deductions for people living outside the U.S. and residents of American Samoa or Puerto Rico — in 2024 must have been $95,000 or less if you’re single, or $195,000 or less if you’re married filing jointly to qualify. You don’t have to itemize to claim the deduction.

Also, don’t overlook the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). You can only claim one of these credits per year, so it’s important to determine which one will save you the most money.

The AOTC is worth up to $2,500 for each eligible student whose expenses you paid in the first four years of their postsecondary education. Your modified AGI must be less than $180,000 if you’re married filing jointly or $90,000 if single or head of household to claim the credit. If the credit lowers the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you.

The LLC is worth up to $2,000 per tax return. There’s no limit on the number of years you can claim the credit, and qualified expenses include courses to improve job skills, making it a valuable tax break for older adults who go back to school, says Miklos Ringbauer, founder of MiklosCPA, an accounting firm in Los Angeles. The income limits for claiming the credit are the same as for the AOTC. The LLC, however, is not refundable.

Adult dependent care costs

Don’t miss adult dependent care tax credits if you’re caring for a parent, older relative or adult child with a disability, Luscombe says.

If you’re supporting a qualifying relative, you might be able to claim a credit of up to $500 for each qualifying dependent. The value of the credit is gradually phased out (potentially to zero) for joint filers with a modified AGI of more than $400,000 and other taxpayers with a modified AGI greater than $200,000.

If you paid for care for a qualifying adult dependent so you could work, you might be able to claim the child and dependent care tax credit. The credit is equal to a percentage of the first $3,000 of qualifying work-related expenses for one dependent or the first $6,000 of expenses if you’re paying for the care of two or more dependents.

For both credits, the person you’re caring for must meet these requirements to qualify as a dependent:

• Can’t be claimed as a dependent on someone else’s tax return.
• Can’t file a joint tax return.
• Be a U.S. citizen; be what the IRS terms a "resident alien," meaning the individual 
• Has lawful permanent residency (also known as a green card) or has been physically present in the U.S. for at least 31 days during the tax year and 183 days during the three-year period that includes the current tax year and the two preceding years; be a U.S. national — someone who is not a citizen but who owes allegiance to the U.S. (for example, American Samoans and Northern Mariana Islanders who chose to become U.S. nationals instead of citizens); or be a resident of Canada or Mexico.
• Be either 18 or younger at the end of the 2024 tax year, 23 or younger and a student at the end of the tax year, or any age if they have a permanent and total disability.
• Live with you for the entire tax year (or until their death) or be your child (biological or adopted), stepchild, sibling, halfsibling, step-sibling, parent, grandparent, stepparent, in-law, aunt, uncle, niece or nephew.
• Had gross income of less than $5,050 in 2024.
• Did not provide more than half of their own financial support for the tax year.

Energy efficiency and clean energy home improvements

You might be able to offset the cost of certain energy efficiency home improvements you made in 2024 by claiming the energy efficient home improvement credit.

Eligible expenses for the credit include exterior doors, windows, skylights, insulation materials, central air conditioners, water heaters, furnaces, boilers, heat pumps, biomass stoves and boilers, and home energy audits that were purchased for your primary home and meet U.S. Department of Energy requirements. The credit is worth 30 percent of the cost, up to a maximum of $2,000, for heat pumps, biomass stoves and boilers; up to $600 for exterior windows and skylights; $250 per exterior door, up to a maximum of $500; $150 for home energy audits; and $1,200 for other energy efficiency home improvements.

There’s also the Residential Clean Energy Credit, which covers up to 30 percent of the cost of solar, wind and geothermal power generation units, solar water heaters, fuel cells and battery storage.

State and local taxes

If you plan to itemize your tax return, make sure you factor in all of the state and local taxes you paid in 2024. You can deduct up to $10,000 in state and local income and property taxes. “In calculating state income taxes, a lot of people just take the figure from their W-2 form that shows the state tax withheld from their employer, Luscombe says, but “they forget to include any additional state tax they paid.”

Alternatively, you can deduct state sales taxes instead of state income taxes. That could make sense, Luscombe says, if you made a big purchase, such as a car or boat, in 2024.

Charitable contributions

Charitable contributions can lower your taxable income, but only if you itemize. The maximum amount you can deduct generally can’t exceed 60 percent of your AGI.

If your donations and other expenses did not exceed the 2024 standard deduction of $29,200 for married couples filing jointly or $14,600 for single filers, consider “bunching” donations in 2025. “This means making larger donations in some years and smaller or no donations in others,” Zhu says. “By bunching, you might be able to itemize in the years with larger donations, getting a tax benefit for your charitable giving. In other years, you can take the standard deduction.”

Moreover, if you’re 70½ or older, you can transfer up to $100,000 annually from an IRA to a charity tax-free. These charitable distributions count toward your required minimum distribution (RMD), which IRA holders who are 73 and older must take annually.

Long-term care expenses

If you itemize, you might be able to claim long-term care insurance premiums and long-term care service costs as medical tax deductions. Your total unreimbursed medical expenses for the year need to exceed 7.5 percent of your adjusted gross income (AGI). Only the amount above that 7.5 percent threshold can be deducted.

If you’re self-employed, 100 percent of long-term care premiums can be deducted as reasonable business expenses for you, your spouse and any dependents, Zhu says. Otherwise, the amount of the premium you can deduct is based on your age:

• Age 40 or younger: $480
• Age 41 to 50: $900
• Age 51 to 60: $1,800
• Age 61 to 70: $4,810
• Age 71 and older: $6,020

Costs for qualified long-term care services required by chronically ill individuals and prescribed by health care practitioners also count as deductible medical expenses. Qualified services include personal care services, such as room and board at an assisted living facility if there is a medical reason for the person to be there.