Tax credits and deductions are two powerful ways to save money on your taxes. Credits cut your tax bill dollar-for-dollar — they tend to be most valuable type of tax benefit for most taxpayers — while deductions reduce the amount of income subject to tax, which lowers your overall bill.
If you’re looking to reduce the amount you owe and maximize your tax refund, credits and deductions both are a great way to do it. But you need to pay close attention to eligibility rules. Luckily, all of the tax deductions we note below are “above-the-line” deductions, which means you don’t have to go to the trouble of itemizing to claim them.
Here are 10 easy tax credits and tax deductions to consider.
1. Child tax credit
If you’re a parent, you may be able to claim the child tax credit (CTC) and trim your tax bill by up to $2,000 per dependent child under age 17. Like some other credits, this one phases out as your income increases. For 2024 and 2025, the credit starts to phase out once modified adjusted gross income hits $200,000 (single filer or head of household) or $400,000 (joint filers).
For most taxpayers, this is a nonrefundable credit, meaning that once it pushes your tax bill to zero, you don’t get any money back in the form of a refund. But some taxpayers may qualify for a refund of up to $1,700. The IRS has step-by-step instructions on how to fill out Schedule 8812 to claim the credit.
Or, most reputable tax software services will calculate your eligibility for the child tax credit and the refundable additional child tax credit.
The current version of the child tax credit (not to be confused with the child and dependent care credit) is set to expire at the end of 2025. Unless Congress extends the existing rules, the credit will revert to a maximum of $1,000 per child starting in the 2026 tax year, and the income limits will be much lower.
2. IRA deduction
If you’re eligible, a deductible contribution to a traditional IRA can lower your taxable income for the year. Because this is an “above-the-line” deduction, you can claim it whether you take the standard deduction or choose to itemize your deductions.
A deductible IRA contribution is one of the very few opportunities to potentially reduce your tax bill after the year has ended: You can make IRA contributions for the 2024 tax year — reducing your 2024 taxable income if you qualify to deduct your IRA contributions — until April 15, 2025.
But consider these important rules related to deducting IRA contributions:
- There’s a maximum annual contribution. For 2024 and 2025, you can contribute up to $7,000 per year to your IRAs, or $8,000 if you’re 50 or older. (You must have earned income to contribution to an IRA, and if your total earned income for the year is less than that contribution limit, then your total earned income is the maximum you can contribute.)
- There are income limits in certain situations: If you or your spouse has access to a workplace retirement plan, such as a 401(k), then you need to check the income limits to see if you can deduct your IRA contributions. (See deductible IRA income limits if you have a retirement plan at work or if your spouse has a retirement plan at work.) To be clear, there are no income limits on making deductible IRA contributions unless you (or your spouse if you’re married) have a retirement plan at work.
Roth IRAs don’t offer upfront tax breaks since contributions are made with after-tax dollars. However, the trade-off is you get tax-free withdrawals in retirement if you meet the rules. Keep in mind, there are income limits on contributing to a Roth IRA.
3. Earned income tax credit
The earned income tax credit (EITC) can be substantial — worth up to $8,046 for eligible families in 2025.
To qualify for the EITC, you must have some form of earned income, which can include wages, salaries, tips, gig work or self-employment income and certain disability payments. You also need a valid Social Security number and less than $11,950 in investment income in 2025 (less than $11,600 in tax year 2024).
The maximum AGI and amount of your credit vary based on how many dependent children you claim, your filing status and other criteria. Use the EIC calculator to figure out if you’re eligible and for how much.
4. Student loan interest deduction
Student loan borrowers can deduct up to $2,500 in student loan interest each tax year, covering both federal and private loans. This deduction lowers your taxable income even if you don’t itemize your deductions (it’s an above-the-line deduction).
To qualify, you must be legally obligated to pay the interest, and you can’t be claimed as a dependent on someone else’s return.
For 2024 tax returns, the student loan interest deduction starts to phase out when your modified adjusted gross income hits $80,000 (single filers) and $165,000 (joint filers).
If you paid over $600 in interest, your loan servicer should send you a 1098-E form with the total amount for your deduction. The IRS has an online tool to see if you qualify for the deduction.
5. American opportunity tax credit
The American opportunity tax credit (AOTC) is one of two major education tax credits available.
The AOTC gives back up to $2,500 per eligible student. To be eligible, the student must be enrolled at least half-time and in the first four years of a higher education program. If the credit brings your tax bill down to zero, you may qualify to have up to $1,000 of any remaining credit amount refunded to you.
You’ll receive a reduced credit amount if your modified adjusted gross income is between $80,000 and $90,000 (single filers) or between $160,000 and $180,000 (joint filers), and the credit is unavailable for taxpayers with income above those income ranges.
6. Lifetime learning tax credit
The other major education tax credit is the lifetime learning credit (LLC), worth up to $2,000 per tax return.
The credit gives back a maximum of 20 percent of the first $10,000 spent on tuition, fees, and eligible courses for undergraduate, graduate or professional studies — even classes to sharpen job skills. There’s no limit to how many years you can claim it, but it phases out if your modified AGI is above $80,000 (single) or $160,000 (joint).
7. Qualified business income deduction
If you’re a freelancer or small-business owner, you can deduct qualified business expenses on your tax return. This goes for sole proprietors, partnerships, S corporations and even some trusts and estates.
The qualified business income (QBI) deduction, also called the Section 199A deduction, lets you deduct up to 20 percent of your qualified income, plus 20 percent of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income.
8. Energy efficient home improvement credit
If you made qualified energy-efficient improvements to your home after Jan. 1, 2023, you may qualify for a tax credit of up to $3,200. To qualify for the credit, improvements must be made to your main home in the U.S., and the home must be an existing one that you improved or added onto, not a newly constructed home.
There’s no lifetime dollar limit for this credit — you can claim the maximum amount for each year in which you make eligible improvements until 2033. Starting in 2025, you’ll have to prove the property is from a qualified manufacturer.
The rules for claiming this credit are complex, with different types of improvements subject to different maximum credit amounts, so qualifying for the full $3,200 will depend on which improvements you make.
Examples of qualifying property improvements include:
- Exterior doors and windows
- Skylights
- Heat pump
- Water heaters
- Biomass stoves
- Boilers
This IRS fact sheet has more details on the energy efficient home improvement credit and the residential clean energy credit.
9. Health savings account (HSA) deduction
If you have a high deductible health plan (HDHP), you can contribute to a health savings account (HSA) and reap major tax benefits.
The contribution maximum was $4,150 for single-person coverage and $8,300 for family coverage in 2024. Those limits rise to $4,300 for single coverage and $8,550 for family coverage in 2025.
Contributions to an HSA “are tax-deductible and withdrawals are tax-free, as long as used for qualified medical expenses,” says Dina Leader Powers, CPA, CFP® and advisor at Fairway Wealth Management.
“This deduction should not be overlooked as it does not have an income limitation,” Powers says. “Many of our clients who qualify to make HSA contributions, including retirees, are investing these funds to reserve for health-care expenses later in life.”
10. Residential clean energy credit
If you need an incentive to make your home greener, the residential clean energy credit could be just what you’re looking for. This federal tax break lets you claim 30 percent of the cost for installing qualifying clean energy systems, such as solar panels, solar water heaters, wind turbines and geothermal heat pumps, with no maximum limit.
Available for systems installed from 2022 to 2032, the credit gradually decreases after that. If your tax liability is less than the credit, you can carry the unused portion forward to future years. It’s a clear win for homeowners looking to save on costs while supporting renewable energy.
Separately, some states also offer incentives for installing solar power systems. See Bankrate’s guide to solar incentives by state.
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