Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
Tax deductions and tax credits can be huge money-savers — if you know what they are, how they work and how to pursue them. Here's a cheat sheet. (Want to skip to the 20 popular tax deductions and credits? Go for it.)
What is a tax deduction?
A tax deduction lowers your taxable income and thus reduces your tax liability. You subtract the amount of the tax deduction from your income, making your taxable income lower. The lower your taxable income, the lower your tax bill.
What are tax write-offs?
The IRS doesn't use the term "tax write-offs" anywhere in the Internal Revenue Code, but the phrase has gained popularity as a synonym for "tax deduction" over the years. If you hear someone talking about a tax write-off, they're probably referring to certain qualified expenses — or deductions — that itemizers can take to lower their taxable income.
What is a tax credit?
A tax credit is a dollar-for-dollar reduction in your actual tax bill. A few credits are refundable, which means if you owe $250 in taxes but qualify for a $1,000 credit, you’ll get a check for the difference of $750. (Most tax credits, however, aren’t refundable.)
As the simplified example in the table shows, a tax credit can make a much bigger dent in your tax bill than a tax deduction.
Would you rather have:
A $10,000 tax deduction
…or a $10,000 tax credit?
Minus tax deduction
Minus tax credit
Your tax bill
* Example rate. The U.S. has a progressive tax system.
How do you claim tax deductions?
Generally, there are two ways to claim tax deductions: Take the standard deduction or itemize deductions. You can’t do both.
The standard tax deduction for 2022 and 2023
The standard deduction basically is a flat-dollar, no-questions-asked reduction in your adjusted gross income (AGI). The amount you qualify for depends on your filing status. Here are the amounts for the 2022 tax year (taxes filed in 2023) and the 2023 tax year (taxes filed in 2024).
2022 tax year
2023 tax year
Married, filing jointly
Married, filing separately
Head of household
People over age 65 or who are blind get a bigger standard deduction.
Itemizing deductions in 2022 and 2023
Itemizing lets you cut your taxable income by taking any of the hundreds of available tax deductions you qualify for. The more you can deduct, the less you’ll pay in taxes.
Itemizing vs. the standard deduction: How to choose
Here’s what the choice boils down to:
If your standard deduction is less than the sum of your itemized deductions, you probably should itemize and save money. Beware, however, that itemizing usually takes more time, requires more forms (Schedule A), and you'll need to have proof that you're entitled to the deductions.
If your standard deduction is more than the sum of your itemized deductions, it might be worth it to take the standard deduction (and the process is faster).
Note: The standard deduction has gone up significantly in recent years, so you might find that it's the better option for you now even if you've itemized in the past. Your tax software or tax advisor can run your return both ways to see which method produces a lower tax bill.
What are some popular tax deductions and tax credits?
There are hundreds of deductions and credits out there. Here's a list of some common ones, as well as links to our other content that will help you learn more.