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overlooked tax deductions

25 Overlooked Tax Deductions Most People Miss (2025)

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Meta Description: 25 commonly missed tax deductions for 2025 — medical expenses, charitable donations, job costs, education, state taxes, and lesser-known IRS deductions.

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H1

Are Funeral Expenses Tax Deductible? Plus 24 Other Missed Deductions

ANSWER SECTION

Funeral expenses are NOT deductible on your personal income tax return (Form 1040). The IRS considers funeral costs personal expenses, not deductible losses. However, funeral expenses ARE deductible on an estate tax return (Form 706) when the estate exceeds the federal exemption threshold of $13.61 million in 2025. For estates large enough to owe federal estate tax, funeral costs reduce the taxable estate dollar-for-dollar, potentially saving 40 cents per dollar in estate taxes.

This distinction between personal and estate deductibility applies to many expenses taxpayers misunderstand. This guide covers 25 commonly overlooked or misunderstood deductions for 2025, including which expenses qualify, which do not, and how changing tax laws affect your filing. Each entry includes the specific IRS form and line number where applicable.

Medical and Health Deductions

1. Medical Expenses (7.5% AGI Floor)

Medical expenses exceeding 7.5% of your adjusted gross income are deductible:

Deductible	NOT Deductible
Doctor and dentist fees	Non-prescription drugs (except insulin)
Prescription medications	Cosmetic surgery
Hospital and nursing home costs	Gym memberships
Medical equipment and supplies	Nutritional supplements
Transportation for medical care	Funeral expenses
Health insurance premiums (after-tax)	Life insurance premiums

Form: Schedule A, Line 1

2. Long-Term Care Insurance Premiums

Age-based deductible limits for 2025:

Age	Maximum Deductible Premium
40 or under	$480
41-50	$890
51-60	$1,790
61-70	$4,800
71 or older	$5,960

Form: Schedule A, Line 1 (subject to 7.5% AGI floor)

3. Medicare Premiums (Self-Employed)

Self-employed individuals can deduct Medicare Part B and Part D premiums as an above-the-line adjustment without itemizing. W-2 employees must itemize and meet the 7.5% AGI floor.

For complete Medicare premium deductibility rules, see our guide on are Medicare premiums tax deductible with self-employment rules.

State and Local Tax Deductions

4. SALT Deduction (Capped at $10,000)

State and local tax deduction combines:

State income taxes OR sales taxes
Local income taxes
Real estate property taxes
Personal property taxes

Filing Status	Maximum SALT Deduction
Single	$10,000
Married Filing Jointly	$10,000
Married Filing Separately	$5,000

Strategy: Choose between income tax and sales tax deduction based on which is higher. The IRS provides optional sales tax tables.

Form: Schedule A, Line 5

5. State-Specific Workarounds

Some states allow pass-through entity tax (PTET) elections that bypass the SALT cap:

State	PTET Available?
California	Yes
New York	Yes
New Jersey	Yes
Connecticut	Mandatory
Texas	N/A (no income tax)

Charitable Contribution Deductions

6. Cash Donations

Cash donations to qualified 501(c)(3) organizations are deductible up to 60% of AGI.

Documentation Required:

Under $250: Bank record or receipt
$250 or more: Written acknowledgment from charity
All donations: Maintain records of date, amount, and recipient

Form: Schedule A, Line 11

7. Non-Cash Charitable Donations

Donation Type	Deductible Amount
Clothing/household items	Fair market value
Vehicles	Sale proceeds (if charity sells) or FMV
Securities held >1 year	Fair market value (no capital gains)
Securities held <1 year	Cost basis

Form: Form 8283 for donations over $500

8. GoFundMe and Crowdfunding

Most crowdfunding donations are NOT deductible:

Platform	Recipient Type	Deductible?
GoFundMe (personal)	Individual	No
GoFundMe Charity	501(c)(3)	Yes
Kickstarter	Business/project	No
Facebook Fundraisers	Depends on recipient	Check status

For complete crowdfunding rules, see our guide on are GoFundMe donations tax deductible with 501(c)(3) verification.

Home-Related Deductions

9. Mortgage Interest

Deductible on loans up to $750,000 ($1 million for pre-December 2017 loans):

Loan Use	Interest Deductible?
Primary residence	Yes
Second home	Yes (choose one)
Home equity loan for improvements	Yes
Home equity loan for other purposes	No

Form: Schedule A, Line 8a

10. Homeowners Insurance

Homeowners insurance is NOT deductible for personal residences. Rental property insurance IS fully deductible on Schedule E.

For complete rules, see our guide on is homeowners insurance tax deductible with rental exceptions.

11. Mortgage Insurance (Expired)

The mortgage insurance premium deduction expired after 2021 and is NOT available for 2025 unless Congress extends it retroactively.

For current status, see our guide on is mortgage insurance tax deductible with legislative updates.

Education and Student Loan Deductions

12. Student Loan Interest

Deduct up to $2,500 of student loan interest annually:

Filing Status	Phase-Out Begins	Phase-Out Ends
Single	$80,000	$95,000
Married Filing Jointly	$165,000	$195,000

Above-the-line deduction: Available even if you do not itemize.

Form: Schedule 1, Line 21

13. Educator Expenses

Teachers can deduct up to $300 for classroom supplies ($600 if both spouses are educators and file jointly):

Eligible Expenses	NOT Eligible
Books and supplies	Non-classroom items
Computer equipment	Personal use items
Professional development	Home schooling costs

Form: Schedule 1, Line 11

Investment-Related Deductions

14. Investment Interest Expense

Deduct margin interest and other investment borrowing costs up to net investment income:

Investment Income	Investment Interest	Deductible Amount
$10,000	$8,000	$8,000 (full)
$10,000	$12,000	$10,000 (limited)

Form: Form 4952, then Schedule A, Line 9

15. Capital Losses

Offset capital gains plus up to $3,000 of ordinary income annually. Excess losses carry forward indefinitely.

Form: Schedule D, then Line 7 of Form 1040

Employment-Related Deductions

16. Union Dues (State Only)

Federal union dues deduction is suspended through 2025. State deductibility varies:

State	Union Dues Deductible?
California	Yes (on state return)
New York	Yes (on state return)
Pennsylvania	Yes (on state return)
Texas	N/A (no income tax)
Florida	N/A (no income tax)

For complete federal and state rules, see our guide on are union dues tax deductible with TCJA impact.

17. Unreimbursed Employee Expenses

Federal deduction is suspended for W-2 employees through 2025. State deductibility varies:

State	Employee Expenses Deductible?
California	Yes (on state return)
New York	Yes (on state return)
Alabama	Yes (on state return)
Federal	No (suspended)

For state-specific rules, see our guide on unreimbursed employee expenses with California instructions.

18. Job Expenses for Specific Workers

Certain workers retain federal deductibility:

Worker Type	Deduction Available?
Armed Forces reservists (travel)	Yes
Qualified performing artists	Yes
Fee-basis government officials	Yes
Employees with impairment-related work expenses	Yes

Business and Self-Employment Deductions

19. Self-Employment Tax Deduction

Deduct one-half of self-employment tax as an above-the-line adjustment:

Self-Employment Tax Paid	Deductible Amount
$10,000	$5,000
$15,000	$7,500

Form: Schedule 1, Line 15

20. Home Office (Self-Employed)

Self-employed individuals can deduct home office expenses:

Method	Calculation	Maximum
Simplified	$5 per square foot	$1,500 (300 sq ft)
Actual expense	Percentage of actual costs	No limit

W-2 employees cannot claim home office deductions under current law.

Miscellaneous Overlooked Deductions

21. Gambling Losses

Deduct gambling losses up to the amount of gambling winnings:

Winnings	Losses	Deductible Losses
$5,000	$7,000	$5,000 (limited to winnings)

Form: Schedule A, Line 16 (must itemize)

22. Tax Preparation Fees

Federal deduction is suspended through 2025. Some states still allow this deduction on state returns.

23. Safe Deposit Box Rental

Federal deduction is suspended for personal use. Business-related safe deposit box fees remain deductible as business expenses.

24. Investment Management Fees

Federal deduction is suspended for individuals. These fees are no longer deductible as miscellaneous itemized deductions.

25. Hobby Expenses

Hobby expenses are no longer deductible under current law. If your activity generates income, you must report it, but you cannot offset it with expenses unless you establish it as a for-profit business.

Estate Tax Deductions

Funeral Expenses on Estate Returns

While not deductible on personal returns, funeral expenses are deductible on Form 706:

Estate Value	Funeral Expenses	Tax Savings (40% rate)
$20,000,000	$25,000	$10,000

Requirements:

Estate must file Form 706 (exceeds $13.61 million exemption)
Expenses must be reasonable and actually paid
Documentation must be maintained

For complete personal vs. estate rules, see our guide on are funeral expenses tax deductible with Form 706 instructions.

FAQ

Can I deduct pet expenses as medical costs? Generally no. However, service animals for disabilities and guard dogs for business security may qualify under specific circumstances. Personal pet expenses remain non-deductible.

Are professional license fees deductible? Federal: No for W-2 employees (suspended). Yes for self-employed individuals as business expenses. State: May be deductible in California, New York, and other states that maintained miscellaneous deductions.

Can I deduct commuting costs? No. Commuting from home to your regular workplace is never deductible. Travel between work locations during the workday may be deductible for self-employed individuals.

Are legal fees tax deductible? Personal legal fees are not deductible. Business-related legal fees are deductible for self-employed individuals. Certain legal fees for producing taxable income or tax advice may be deductible as miscellaneous itemized deductions (currently suspended federally).

Can I deduct political contributions? No. Political contributions to candidates, parties, and PACs are never tax deductible. This includes donations, event tickets, and advertising supporting political campaigns.

Related Resources

Are Funeral Expenses Tax Deductible? — Personal vs. estate tax treatment
Are Union Dues Tax Deductible? — TCJA impact and state rules
Unreimbursed Employee Expenses — W-2 employee deduction rules
GoFundMe Donations Tax Deductible — Crowdfunding tax status

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