Five Common Tax Deductions to Claim on 2024 Tax Returns

Tax deductions can impact your taxable income, reduce your overall tax liability and potentially increase your refund.

Why It Matters

Tax deductions are specific expenses that the IRS allows taxpayers to subtract from their total income. By lowering taxable income, deductions effectively decrease the overall tax liability, potentially resulting in a lower tax bill or a higher refund.

While not everyone is eligible for all deductions, many Americans may qualify for deductions because they have children, student loans or make charitable donations.

Above-the-Line vs. Below-the-Line Deductions

Tax deductions can be classified into two main categories: above-the-line and below-the-line. Above-the-line deductions reduce your adjusted gross income (AGI) and can be claimed regardless of whether you itemize or take the standard deduction. Below-the-line deductions, on the other hand, are only available to taxpayers who itemize their deductions.

Thompson said a common mistake is assuming all deductions reduce taxable income dollar for dollar. Below-the-line deductions (itemized deductions) reduce taxable income based on your marginal tax rate. So if you’re in the 24 percent bracket, each dollar reduces tax liability by 24 cents. Above-the-line deductions (like student loan interest) reduce total income before taxes, making them more valuable.

What to Know

Maximizing your tax deductions can significantly reduce your taxable income and lower your overall tax liability. Here are five common deductions that many taxpayers can benefit from.

Child Tax Credit

The Child Tax Credit for 2024 is a tax benefit that provides financial relief to families with qualifying dependent children. For the 2024 tax year (taxes filed in 2025), the credit is worth up to $2,000 per qualifying child. Of this amount, up to $1,700 is refundable, which means you could receive a refund even if you don’t owe any taxes.

You’re eligible for the full credit amount if your Modified Adjusted Gross Income (MAGI) is $400,000 or below for married couples filing jointly, or $200,000 or below for all other filers. If your MAGI exceeds these limits, the credit is reduced by $50 for each $1,000 of income above the threshold until it phases out completely.

The credit was increased to $2,000 per qualifying child under the Tax Cuts and Jobs Act (TCJA) of 2017. This legislation doubled the previous credit amount, but without further legislative action, the credit amount is set to revert to $1,000 per child after 2025.

Student Loan Interest Deduction

If you paid interest on a qualified student loan in 2024, you might be eligible for the Student Loan Interest Deduction. This above-the-line deduction allows you to deduct up to $2,500 of student loan interest, which can reduce your adjusted gross income (AGI). Being an above-the-line deduction, you can claim this deduction even if you do not itemize your deductions, making it more accessible for many taxpayers.

To qualify, the loan must have been taken out solely to pay qualified education expenses, and you must be legally obligated to pay the interest. Additionally, there are income limits for this deduction: for 2024, the deduction begins to phase out if your modified adjusted gross income (MAGI) is $80,000 for single filers and $165,000 for married couples filing jointly. Single filers with a MAGI of $95,000 or more and married couples filing jointly with a MAGI of $195,000 or more are ineligible.

However, Luscombe notes Republican proposals to eliminate the Department of Education and transfer its functions to the states raise concerns about the future of federal student loan programs.

Child and Dependent Care Credit

The Child and Dependent Care Credit is designed to help offset the costs of caring for a child or dependent while you work or look for work. You may be able to claim up to 35 percent of qualifying expenses, with a maximum credit of $3,000 for one dependent or $6,000 for two or more dependents.

Qualifying expenses can include costs for daycare, after-school programs, and even certain types of home care. Luscombe advises parents to be mindful of all qualifying expenses when claiming the Child and Dependent Care Credit. Many parents only include regular daycare expenses and often fail “to include other activities such as summer day camp expenses.”

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a tax benefit for low- to moderate-income workers. For the 2024 tax year, eligible individuals can receive a credit of up to $7,830 depending on your income and the number of qualifying children. The credit amount increases with the number of qualifying children, offering greater support to larger families and is refundable, meaning it can reduce your tax liability or result in a refund if the credit amount exceeds the taxes you owe.

Some common tax deductions may be in danger of being reduced or eliminated, Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting told Newsweek, “Congress needs to act this year to extend some of the expiring provisions of the Tax Cuts and Jobs Act.” Otherwise, the standard deduction “and tax credits such as the Child Tax Credit would be reduced.”

There’s also concern regarding the Student Loan Interest Deduction. Kevin Thompson, founder and CEO of 9i Capital Group, told Newsweek he believes with the incoming Trump administration, forgiveness programs are unlikely to expand, and potential legislative changes could affect the deductibility of student loan interest. “It’s a waiting game to see how policies will develop,” he said.

Charitable Donation Deduction

If you made charitable contributions in 2024, you might be able to deduct those donations from your taxable income. This can significantly reduce the amount of taxes you owe, providing a financial incentive for supporting charitable causes.

To claim this deduction, you need to itemize your deductions on your tax return rather than taking the standard deduction. You also need to have proper documentation, such as receipts or records of your charitable donations, to substantiate your claims.

Alex Beene, financial literacy instructor for the University of Tennessee at Martin told Newsweek that charitable deductions are not just limited to cash donations. “If you donated goods or even used your vehicle for mileage in charitable work, it can be deducted,” he said.

What People Are Saying

Alex Beene, financial literacy instructor for the University of Tennessee at Martin told Newsweek: “The incoming Trump administration has had many members and advocates from within it making promises of a more simplified tax code that lowers the financial burden for Americans. There’s no way to know if that will come to pass, but we do know during the first Trump term, there was a push to combine deductions and set certain limit amounts to make the filing process easier to manage for most.

I would just say taxpayers need to be vigilant over the next 12 months and follow bills that will be moving through Congress and what they entail for their future deduction opportunities. The odds are high we’re going to see changes, but it’s hard to say just yet what those will be.”

Kevin Thompson, founder and CEO of 9i Capital Group, told Newsweek: “Looking ahead, there was significant campaigning around increasing the Child Tax Credit, which could boost refunds for many parents. However, Republicans also ran on reducing the size of government and cutting spending by $2 trillion. With a $2 trillion price tag it remains uncertain how they will balance tax reductions with spending cuts. The outcome will determine whether tax credits expand or remain limited under the new administration.

Furthermore, the expansion of the [Tax Cuts and Jobs Act] remains a huge question for many business owners and others alike. I think this will come down to some legislative battles as both houses of the government are now controlled by the Republicans. Let’s see if they can come together and expand the TCJA, and what will the cost of that expansion be and which programs may feel it.”

Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting told Newsweek: “Congress needs to act this year to extend some of the expiring provisions of the Tax Cuts and Jobs Act or deductions such as the standard deduction would be reduced and tax credits such as the Child Tax Credit would be reduced. Trump has also discussed eliminating some of the tax breaks associated with clean energy enacted as part of the Inflation Reduction Act in 2022, with particular focus on eliminating the Clean Vehicle Credit.”

What Happens Next

To get the most out of your tax deductions, Beene advises against navigating this complex process alone and notes the importance of consulting a tax professional to ensure accurate filing and to avoid potential audits. He suggests that online tax software specialists can also provide valuable guidance for an additional fee.

Thompson recommends focusing on strategies like maximizing retirement contributions and utilizing a Health Savings Account (HSA) if you have a qualifying health plan. The HSA offers triple tax benefits, including tax-deductible contributions, tax-deferred growth and tax-free withdrawals for qualifying medical expenses.

Luscombe suggests maintaining comprehensive tax records and using strategies like bunching itemized deductions, planning charitable contributions wisely and maximizing retirement plan contributions to optimize tax savings.