Understanding Tax Write-Offs

Tax write-offs, or tax deductions, lower the amount of income that is subject to tax. By reducing taxable income, they can also reduce the amount you owe.

They are not the same as tax credits. Tax credits cut your tax bill directly by reducing the taxes due, while deductions lower the income that gets taxed. Both, however, can help decrease your overall tax liability.

This Intuit TurboTax guide explains the basics of how write-offs work and shows how eligible deductions can help you save money.

Tax news: Recent updates to write-offs

The One Big, Beautiful Bill permanently extends the standard deduction, which was nearly doubled under the Tax Cuts and Jobs Act (TCJA). The Qualified Business Income Deduction was also made permanently larger. In addition, the SALT deduction has been temporarily increased through 2029.

Temporary deductions were also added for car loan interest, along with deductions for tips and overtime pay for tax years 2025 through 2028.

Key takeaways

• A tax write-off is an expense you can claim to reduce taxable income and help lower your tax bill.
• The value of a write-off depends on the deduction being claimed and may vary based on filing status and income.
• Common individual write-offs include medical expenses, charitable donations, mortgage interest, and traditional IRA contributions.
• Businesses and self-employed workers may deduct certain business expenses, including home office costs, internet, mileage, and payroll.

How does a tax write-off work?

Write-offs are eligible expenses that can be deducted on an individual tax return. They reduce personal taxable income. For self-employed people and business owners, expenses directly connected to running a business may also be written off.

The Internal Revenue Service, or IRS, oversees tax administration and collection. When you file a return, the IRS uses your reported income minus deductions to determine your tax bracket and the rate applied to your taxable income. A tax bracket refers to an income range.

For example, if you are single and report $50,000 in income, subtracting the standard deduction of $16,100 for 2026, or $15,750 for 2025, would leave you with taxable income of $33,900 for 2026 or $34,250 for 2025.

In other words, the standard deduction lowers reported income, which reduces taxable income and can shrink the tax bill.

What are standard and itemized deductions?

Standard and itemized deductions are two ways to reduce adjusted gross income, or AGI, which is then used to calculate taxable income. The standard deduction is a fixed amount based on filing status, while itemized deductions are separate expenses you list if they total more than the standard deduction.

In most cases, taxpayers choose the method that offers the greater tax benefit. Only one can be used in a given year, and the goal is to choose the option that produces the lowest taxable income.

The standard deduction is usually the default choice unless you have significant deductible expenses. For the 2026 tax year, the standard deduction is:

• $16,100 for single taxpayers and married individuals filing separately
• $32,200 for married couples filing jointly
• $24,150 for individuals filing as head of household

The One Big, Beautiful Bill permanently extended the higher standard deduction that was nearly doubled by the Tax Cuts and Jobs Act of 2017, making it easier for many taxpayers to use the standard route when filing.

Common itemized deductions include:

• Property taxes and state income taxes
• Mortgage interest
• Medical expenses
• Charitable contributions

If you itemize, it is generally wise to claim every deduction you qualify for in order to maximize savings.

What’s the difference between a tax deduction and a tax credit?

Tax credits differ from deductions because they reduce what you owe dollar for dollar. A $100 credit lowers your tax bill by $100, while a $100 deduction reduces taxable income by $100. The actual tax savings from a deduction depends on your tax bracket.

For someone in the 24% bracket, a $100 deduction would save $24 in taxes. A $100 credit, by contrast, would save the full $100. Common credits include the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Credit.

In general, many deductions and credits are reduced at higher income levels. The IRS decides which expenses qualify as legitimate write-offs.

How much are tax write-offs worth?

The value of a write-off depends on the rules attached to the deduction or credit, including any limits set by the tax code. Those limits may be affected by factors such as:

• Filing status
• Income
• Dependents

In many cases, the amount you can deduct is restricted by your adjusted gross income. One example is the student loan interest deduction, which starts to phase out once income exceeds $85,000 for single filers or $170,000 for married couples filing jointly for 2025. The single-filer phaseout stays the same for tax year 2026, while the joint-filer threshold rises to $175,000.

Sometimes, claiming a write-off may not help. If your total itemized deductions are less than the standard deduction for your filing status, the standard deduction is usually the better choice.