What is a tax write-off?

Tax write-offs, also known as tax deductions, reduce taxable income. By lowering your taxable income, you can reduce how much you owe.

Deductions are different from tax credits. Tax credits directly cut your tax bill by reducing the actual taxes owed. However, both work to reduce your tax liability.

This guide from Intuit TurboTax will cover the basics of how write-offs work. It also discusses how you can leverage the deductions you qualify for to maximize your savings.

Tax news: What are the most recent changes to tax write-offs?

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

Additionally, temporary deductions were added for car loan interest, as well as 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 your taxable income and help lower your tax bill.
• The value of tax write-offs is dependent on the specific deduction you’re trying to claim and may vary depending on your filing status and income.
• For individuals, some common tax write-offs include medical expenses, donations, mortgage interest, and traditional IRA contributions.
• Businesses and self-employed individuals are allowed to write off certain business expenses, including home office, internet, mileage, and payroll costs.

How does a tax write-off work?

Write-offs are expenses that you’re eligible to deduct on your individual taxes. These items result in a reduction in your personal taxable income. When you’re self-employed and have your own business, you can write off expenses directly related to conducting business.

The Internal Revenue Service (IRS) is responsible for administering and collecting taxes. When you file your tax return, the IRS uses your reported income minus your tax deductions (or tax write-offs) to determine what tax bracket you’re in and the tax rate applied to your taxable income. A tax bracket is applied to an income range.

For example, let’s say when you file your taxes, you are single and your total reported income is $50,000. After reducing that amount by the standard deduction of $16,100 for 2026 ($15,750 for 2025), your taxable income is reduced to $33,900 for 2026 (or $34,250 for 2025). 

The standard deduction reduces your reported income and, in turn, lowers your taxable income and your tax bill.

What are standard and itemized deductions?

Standard and itemized deductions are two write-off options used to reduce your adjusted gross income (AGI), which is then used to determine your taxable income. The standard deduction is a fixed number that is based on your filing status, while itemized deductions are individual expenses you can claim if your qualifying write-offs exceed the standard deduction.

Typically, the type of deduction used will vary from year to year based upon the highest overall tax benefit provided by each deduction. Only one method can be used in any given year. The best option is to use the deduction that results in the lowest taxable income.

The standard deduction is typically considered the default, unless you have a lot of large expenses you can write off. 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

As of July 4, 2025, the One Big, Beautiful Bill (OBBB) has permanently extended the increase in the standard deduction, which was nearly doubled by the Tax Cuts and Jobs Act (TCJA) of 2017, meaning more taxpayers can simplify the filing process by claiming the standard deduction.

Some popular itemized deductions include:

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

When itemizing deductions, you’ll want to take any write-offs that you’re eligible for to maximize your tax savings.

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

Unlike tax deductions, tax credits are a dollar-for-dollar reduction of the taxes you owe. For example, a $100 credit reduces your tax liability dollar-for-dollar by $100. On the other hand, a deduction reduces your taxable income by $100. The resulting amount of tax you save depends on your tax bracket.

If you were in the 24% tax bracket, a $100 deduction would reduce your taxes by $24. On the other hand, a $100 credit would reduce your taxes by $100. Common credits include the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Credit.

Generally, the majority of deductions and credits phase out at higher incomes. The IRS determines what expenses are considered legitimate write-offs.

How much are tax write-offs worth?

The amount that a tax write-off is worth depends on several factors surrounding the deduction or credit, including limits, which are prescribed by the tax provisions. These limits can depend on several factors, such as:

• Filing status
• Income
• Dependents

Generally, the amount you can write off is limited based on your adjusted gross income. An example of this is the student loan interest deduction, which begins to phase out when income exceeds $85,000 as a single person or $170,000 for couples who are married filing jointly, for 2025. The phaseout amount for single filers remains the same for tax year 2026, while it increases to $175,000 for those filing jointly.

In some cases, it’s possible that taking the tax write-off would not be to your benefit. For example, if your total itemized deductions are less than the standard deduction amount for your filing status, it would be in your best interest to choose the standard deduction.

This story was produced by Intuit TurboTax and reviewed and distributed by Stacker.