Some of the biggest tax deductions individuals miss are the ones they never think to check. This guide covers deductions for the 2026 tax year, generally reported on returns you file in 2027. Every year, filers pay more than they need to because they do not know a deduction exists or assume it does not apply to them. A deduction lowers your taxable income, which can reduce what you owe or increase a refund, depending on your situation. If you are in Allen or anywhere across Collin County, a short review can help you claim what you are entitled to.
First, a quick note. Some deductions require you to itemize, while others, called above-the-line deductions, you can claim even if you take the standard deduction. We will flag which is which. Tax law also changed in recent years, so confirm the current-year rules and dollar limits before you file. We link to the IRS for each item so you can check the latest figures.
Why do so many deductions go unclaimed? A few reasons. The standard deduction is high, so many people stop looking once they choose it and miss the above-the-line breaks that apply anyway. Others do not keep records through the year, so they cannot prove a deduction even when they qualify. And some simply do not know a break exists. This guide tackles all three.
Start Here: Above-the-Line Deductions
Above-the-line deductions, technically called adjustments to income, are the most valuable to know, because you can claim them whether or not you itemize. They lower your adjusted gross income, which can also help you qualify for other breaks.
- Educator expenses. Teachers and other eligible educators can deduct out-of-pocket classroom supplies. For the 2026 tax year the limit is $350. See the IRS educator expense page.
- HSA contributions. If you have a qualifying high-deductible health plan, contributions you make yourself with after-tax money to a health savings account are generally deductible, up to the annual IRS limit. Contributions made through your employer or a pre-tax payroll plan are already excluded from your income, so do not deduct those again. Check the current-year limit in IRS Publication 969.
- Traditional IRA contributions. Depending on your income and whether you have a workplace retirement plan, some or all of a traditional IRA contribution may be deductible. See the IRA deduction limits.
- Self-employed adjustments. If you have any self-employment income, even from a side gig, you may deduct half of your self-employment tax, health insurance premiums, and qualifying retirement contributions.
- Early withdrawal penalty. If a bank charged you a penalty for cashing out a CD early, that penalty is deductible. It is small, but it is easy to overlook.
- Alimony (older agreements). Alimony paid under a divorce agreement finalized before 2019 is generally deductible. Agreements from 2019 onward are not, so the date matters here.
- Jury duty pay you gave back. If your employer kept paying your salary during jury duty and required you to hand over the court’s jury pay, you can deduct that amount you turned over.
These are easy to overlook, because people assume the standard deduction covers everything. It does not. Above-the-line adjustments come off the top regardless, so it is worth checking each one that might apply to you.
One more that self-employed filers overlook: contributions to a SEP-IRA or Solo 401(k) are deductible and can be sizable, lowering your taxable income while you save for retirement. If you have any self-employment income, even a side business, ask whether one of these plans fits before you file.
New Deductions for the 2026 Tax Year
Recent federal law added several deductions that many filers will see for the first time. They are among the most valuable and the most overlooked, simply because they are new. Each has its own eligibility rules and income limits, and several are temporary, so confirm the exact rules and current amounts with the IRS or a preparer before you claim them.
- Senior deduction. Taxpayers age 65 and older may claim an additional deduction of up to $6,000, subject to income limits.
- Qualified tips. Workers in eligible tipped occupations may deduct up to $25,000 of qualified tips, within income limits.
- Qualified overtime. Eligible workers may deduct qualified overtime pay, up to $12,500, or up to $25,000 for joint filers, subject to income limits.
- Car loan interest. Interest on a loan for a qualifying new, personal-use vehicle may be deductible, up to $10,000, with eligibility and income rules.
Because these are new and detailed, they are easy to get wrong. If any might apply to you, confirm the exact rules first, or ask a preparer to check your eligibility.
Education and Student Loan Deductions
Education costs come with several tax breaks, and the student loan interest deduction is an easy one to overlook.
If you paid interest on a qualifying student loan, you can generally deduct up to $2,500 of it, subject to income phase-outs. This one is above the line, so you do not need to itemize to claim it. Confirm the current phase-out ranges on the IRS student loan interest page.
Two paperwork tips help here. Your loan servicer sends a Form 1098-E showing the interest you paid, and your school sends a Form 1098-T for tuition. To claim the interest, you generally must be legally obligated on the loan and not claimed as someone else’s dependent. If a parent is paying a loan the student is obligated on, the rules on who deducts it can surprise people, so it is worth checking.
One common mix-up: two of the biggest education tax breaks are credits, not deductions. The American Opportunity and Lifetime Learning Credits lower your tax dollar for dollar, which is often even better than a deduction. If you paid tuition for yourself, a spouse, or a dependent, check whether you qualify. We explain the difference in our guide to tax credits versus deductions.
A note for Texas families: contributions to a 529 college savings plan are not deductible on your federal return, and because Texas has no state income tax, there is no state deduction to claim either. The account can still grow tax-advantaged, so it remains a useful tool even without an upfront deduction. And if your employer offers tuition or student loan assistance, ask how it is treated, since a portion may be tax-free to you.
Medical Expenses and HSAs
Medical costs can be deductible, but the rules trip people up, so this is a common place to leave money behind.
The HSA deduction above is the simplest medical break, since it comes off the top. Beyond that, if you itemize, you can deduct unreimbursed medical and dental expenses that go above 7.5% of your adjusted gross income. Only the amount over that threshold counts, which is exactly why people miss it. A year with a surgery, a birth, or major dental work is when this can matter most. See the IRS medical expense topic for what qualifies.
The list of qualifying costs is wider than most people expect. It can include mileage driven for medical care, prescriptions, glasses and contacts, dental work, mental health care, and certain medical equipment. Costs already paid by insurance or a reimbursement account do not count, since you were not out of pocket. Keep your receipts through the year so you are not guessing in April.
Two things are worth knowing. First, the HSA is unusually powerful: contributions can be deductible, the money can grow tax-free, and withdrawals for qualified medical costs come out tax-free. Second, if you have a big medical year coming, some people time elective costs into the same year so more of the total clears the 7.5% threshold at once. That is called bunching, and it can turn a near-miss into a real deduction.
Not sure whether your expenses clear the threshold? A short review can tell you quickly. Book a free consult.
Charitable Giving and State Taxes
State taxes are an itemized deduction, and charitable giving is mostly itemized, with a new exception for 2026 that we will cover below. Either way, people leave parts of these unclaimed.
Charitable giving changed for the 2026 tax year, in ways that cut both directions. If you do not itemize, you can now deduct a limited amount of cash donations to qualified charities, up to $1,000, or $2,000 on a joint return. If you do itemize, a new floor applies: only charitable donations above 0.5% of your adjusted gross income count. Both figures are new, so confirm them before you rely on them.
Beyond cash, people forget the non-cash pieces: donated clothing and household goods, and the mileage you drive for volunteer work, which has its own set rate. The recordkeeping rules matter here. A cash gift needs a bank record or receipt. A gift of $250 or more needs a written acknowledgment from the qualified organization. Non-cash donations over $500 generally require Form 8283, and larger gifts may need an appraisal. The habit is simple: get a receipt and keep it.
Two moves are easy to overlook. If your giving is near the point where itemizing pays off, bunching two years of donations into one, sometimes through a donor-advised fund, can push you over. And if you are at least age 70 and a half, a qualified charitable distribution from an IRA may keep the transferred amount out of your taxable income. It can also count toward a required minimum distribution once those begin, generally at age 73.
State and local taxes, often called SALT, are another itemized deduction. They include state income or sales tax plus property tax, up to a cap. For the 2026 tax year, that cap is $40,400, or $20,200 for married filing separately, with a reduction at higher incomes. Confirm the figure, since it is new. Check the IRS deductible taxes topic. In Texas, with no state income tax, the sales-tax and property-tax portions are what count. Property tax alone can be significant here, so gather that statement first.
A Texas-specific tip on the sales-tax piece: you can deduct either your actual sales tax from receipts or an amount from the IRS optional sales-tax tables. You can also add the tax from a big purchase, like a vehicle, on top of the table amount. For many Allen and Collin County homeowners, though, the property-tax portion is the larger number.
The Home Office Deduction (If Eligible)
The home office deduction is valuable, but it is narrower than many people think. Ordinary W-2 employees generally cannot claim it, even when they work from home full time. The disallowance of unreimbursed employee business expenses is now permanent. The deduction is mainly for the self-employed, with different rules for partners and a few special categories. See the IRS home office page for the current details.
If you do qualify, two rules matter most. The space must be used regularly and only for your business, and it should be your principal place of business. From there, you can pick one of two methods. The simplified method uses a set rate per square foot, up to a maximum area. The actual-expense method deducts a business-use portion of your real home costs, such as rent or mortgage interest, utilities, insurance, and repairs. The simplified method means less paperwork; the actual method can be larger when your home costs are high.
If you run a business or a side gig from home, this one is worth a close look, and keeping simple records of the space and your home costs makes it easy to claim. If you are a regular employee, do not assume you can claim it without checking the current rules first.
Common Questions
Which deductions can Allen filers easily overlook? The above-the-line ones can be easy to overlook, because it is natural to assume the standard deduction covers everything. Student loan interest, HSA contributions, and educator expenses are examples worth checking.
Should I itemize or take the standard deduction? Take whichever is larger. Many filers do better with the standard deduction, but a year with big medical bills, large charitable gifts, or high property tax can tip the math toward itemizing. A quick review settles it.
What records do I need to claim these? Keep receipts, the tax forms you receive (such as 1098-E for student loan interest), acknowledgment letters for charitable gifts of $250 or more, and mileage logs for medical or volunteer driving. A deduction you cannot support is one you should not claim.
Review Deductions Before You File
The deductions you miss are the ones you do not know to look for. That is where a second set of eyes helps most.
At Tax by Lonestar, we prepare individual and small business returns for people across Allen and the surrounding Collin County area. When we prepare a return, we review it for deductions and credits you may have overlooked, and we explain what applies to your situation. We also offer tax preparation, bookkeeping, and payroll, so your filing and your records stay connected.
Think you missed a deduction on a past return? You are often not stuck with it. In many cases you can file an amended return, generally within three years of the original filing, to claim a deduction you overlooked. It is not automatic, so if you suspect you left something behind in a recent year, it is worth having someone review those returns.
Book a free tax consultation and let’s review your return for deductions you may have missed. Schedule your consult.
This guide is general information, not tax advice. Tax rules and dollar limits change, and several changed for recent years. Please confirm the current-year figures and talk to a qualified tax professional about your situation before you act.
