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Tax season can be stressful, but maximizing the deductions and credits available to you can make a big difference in how much you owe. Whether you’re self-employed, a homeowner, or a student, there are plenty of opportunities to reduce your taxable income and keep more of your hard-earned money. In this guide, we’ll show you 10 proven ways to cut your tax bill in 2024, so you can keep more of your hard-earned money.
The 10 deductions and credits in this blog are just a summary—each one could easily be the topic of its own blog post. Some of these deductions and credits were impacted by the Tax Cuts and Jobs Act passed in 2017, which is set to expire in 2025. Tax laws are fluid and subject to change, so I highly recommend using the links I’ve provided and consulting with your financial or tax advisor for the most up-to-date guidance. Some of these are well-known strategies, but others are lesser-known, and they could help you save even more this year.
Who knows, I might just dive deeper into each of these topics in future blog posts—stay tuned!
- 1. Earned Income Tax Credit (EITC)
- 2. Child Tax Credits
- 3. Retirement Account Contributions: 401(k) and Traditional IRA
- 4. Home Office Deduction
- 5. Education Credits (American Opportunity Tax Credit & Lifetime Learning Credit)
- 6. Charitable Contributions
- 7. Mortgage Interest Deduction
- 8. Medical Expenses Deduction
- 9. State and Local Taxes (SALT) Deduction
- 10. Saver's Credit
- Final Thoughts
1. Earned Income Tax Credit (EITC)
The Earned Income Tax Credit is available to low-to-moderate-income earners, with the amount you qualify for depending on your income, filing status, and number of dependents. For the 2024 tax year, families with three or more qualifying children can receive up to $7,830, while those without children may be eligible for a credit of up to $632.
The requirements for eligibility are somewhat complicated, so see Earned Income Tax Credit (EITC) ↗ on the IRS website for more information.
2. Child Tax Credits
The Child Tax Credit (CTC) allows you to claim up to $2,000 per qualifying child under the age of 17. If your tax liability is lower than the credit amount, up to $1,600 of the credit is refundable as the Additional Child Tax Credit (ACTC). The income phase-out begins at $200,000 for single filers and $400,000 for married couples filing jointly.
If you have dependents who don’t qualify for the CTC, you may be eligible to claim the Credit for Other Dependents (ODC). This credit offers up to $500 per dependent and applies to dependents of any age, including elderly parents or other relatives. It also includes dependents who have Social Security or (Individual Taxpayer Identification Number) ITIN numbers and those who live with you, but aren’t related.
Like the CTC, the ODC credit begins to phase out at $200,000 for single filers and $400,000 for joint filers. To qualify, the dependent must be claimed on your return and cannot be used for the CTC.
For more information about these child credits, see What You Need to Know about CTC, ACTC and ODC ↗ on the IRS website.
3. Retirement Account Contributions: 401(k) and Traditional IRA
Contributions to traditional retirement accounts, such as 401(k)s and IRAs, can reduce your taxable income. For 2024, you can contribute up to $23,000 to a 401(k) plan (or $30,500 if you’re 50 or older). For IRAs, the limit is $7,000 ($8,000 if you’re 50 or older).
Your IRA deduction may be limited if you or your spouse is covered by a workplace retirement plan and your income exceeds certain thresholds.
For more information on 401(k) contribution limits, see Retirement topics – 401(k) and profit-sharing plan contribution limits ↗ on the IRS website.
For more information on IRA contribution limits, see Retirement topics – IRA contribution limits ↗ on the IRS website.
4. Home Office Deduction
If you’re self-employed and use a portion of your home exclusively for business, you can deduct a portion of your rent, mortgage interest, utilities, and depreciation. You can opt for the simplified deduction, which allows you to deduct $5 per square foot, up to 300 square feet (for a maximum of $1,500).
Alternatively, you can calculate the actual expenses based on the percentage of your home used for business.
This deduction is only available for those who are self-employed—not for employees working remotely.
For more information, see Simplified option for home office deduction ↗ on the IRS website.
For general information on deductions for business use of your home, see About Publication 587, Business Use of Your Home ↗ on the IRS website.
5. Education Credits (American Opportunity Tax Credit & Lifetime Learning Credit)
The American Opportunity Tax Credit (AOTC) offers up to $2,500 per eligible student for the first four years of college, with up to $1,000 of the credit being refundable. The Lifetime Learning Credit (LLC), on the other hand, provides up to $2,000 per return (not per student) for any level of post-secondary education, including courses for improving job skills. There is no limit on the number of years you can claim the LLC credit.
The income phase-out for the AOTC and the LLC begins at $80,000 for single filers and $160,000 for married couples filing jointly.
For more information about the AOTC, see American Opportunity Tax Credit ↗ on the IRS website.
For more information about the LLC, see Lifetime Learning Credit ↗ on the IRS website.
To compare the two credits, see Compare Education Credits ↗ on the IRS website.
6. Charitable Contributions
You can deduct donations to qualified charitable organizations, and the amount varies depending on whether you itemize your deductions. For 2024, individuals can generally deduct up to 60% of their adjusted gross income (AGI) for cash donations to public charities, provided they itemize.
Non-cash contributions, like clothing or household items, must be in good condition and require detailed records for any donation exceeding $500. For donations of $250 or more, you’ll need a written acknowledgment from the charity.
For more information, see Charitable contribution deductions ↗ on the IRS website.
7. Mortgage Interest Deduction
Homeowners can deduct the interest paid on up to $750,000 of mortgage debt for their primary residence or second home if the mortgage was taken out after December 15, 2017. For mortgages originated before that date, the limit is $1 million.
You can also deduct the interest on home equity loans or lines of credit, but only if the borrowed funds are used to buy, build, or substantially improve the home. Interest on loans not used for these purposes (such as paying off credit card debt) is not deductible.
For more information, see Publication 936 (2023), Home Mortgage Interest Deduction ↗ on the IRS website.
8. Medical Expenses Deduction
You can deduct unreimbursed medical expenses that exceed 7.5% of your AGI. These expenses include doctor visits, hospital care, prescription medications, and medical insurance premiums (if not covered by an employer). For example, if your AGI is $50,000, you can deduct medical expenses exceeding $3,750.
You must itemize your deductions to take advantage of this, and eligible expenses also include dental care, long-term care insurance, and even mileage for medical-related travel.
For more information, see Topic no. 502, Medical and dental expenses ↗ on the IRS website.
9. State and Local Taxes (SALT) Deduction
The SALT deduction allows you to deduct up to $10,000 ($5,000 if married filing separately) of the total state and local income, sales, and property taxes paid during the year. This limit applies to both single filers and married couples filing jointly.
The SALT deduction may not provide as much benefit to taxpayers in states with high taxes, but it remains a valuable deduction for many homeowners.
For more information, see Topic no. 503, Deductible taxes ↗ on the IRS website.
10. Saver’s Credit
The Saver’s Credit rewards low-to-moderate-income individuals for contributing to a retirement account. The credit can be worth up to $1,000 ($2,000 for married couples) and is based on a percentage of the first $2,000 contributed to IRAs, 401(k)s, and similar retirement accounts.
The credit rate is 10%, 20%, or 50%, depending on your filing status and AGI.
For more information, see Retirement Savings Contributions Credit (Saver’s Credit) ↗ on the IRS website.
Final Thoughts
Taking full advantage of the tax deductions and credits available to you can make a substantial difference when filing your return. Whether it’s through saving for retirement, owning a home, or contributing to charity, there are many ways to lower your tax bill.
For more information about taxes, see our Taxes category page.
And remember, it’s always a great idea to chat with your financial or tax advisor to make sure your decisions are right on track and aligned with the latest guidelines and laws.