22 Popular Tax Credits and Tax Deductions for 2024

 

Some of the most popular tax credits.

1. Tax credits for people with kids

2. Tax credits for low-to-middle-income households

3. Tax credits for investing in retirement

4. Tax credits for education

5. Tax credits for green purchases

 

Tax credits generally provide a more significant tax benefit than tax deductions. However, the specific benefits you can claim will depend on your individual circumstances.

 

Tax credits for people with kids

 

1. Child tax credit

The child tax credit (CTC) is a tax break for families with children below the age of 17. For 2024, the credit is worth up to $2,000 per child, with $1,700 being potentially refundable. To qualify, you have to meet certain income requirements.

 

2. Child and dependent care credit

The child and dependent care credit (CDCC) is meant to cover a percentage of day care and similar costs for a child under 13, a spouse or parent unable to care for themselves, or another dependent so you can work. Generally, it's up to 35% of $3,000 of expenses for one dependent or $6,000 for two or more dependents.

 

Tax credits for education

 

3. American opportunity tax credit

The American opportunity tax credit, sometimes shortened to AOC, lets you claim all of the first $2,000 you spent on tuition, books, equipment and school fees — but not living expenses or transportation — plus 25% of the next $2,000, for a total of $2,500. It's also partially refundable, which means you can get up to $1,000 back if the credit zeros out your tax bill.

 

4. Lifetime learning credit

The lifetime learning credit lets you claim 20% of the first $10,000 you paid toward tuition and fees, for a maximum of $2,000. Like the American opportunity tax credit, the lifetime learning credit doesn’t count living expenses or transportation as eligible expenses. You can claim books or supplies needed for coursework.

 

5. Student loan interest deduction

The student loan interest deduction lets borrowers write off up to $2,500 from their taxable income if they paid interest on their student loans. You don't need to itemize in order to take advantage of this deduction.

 

6. Adoption credit

The adoption credit is a tax break that helps taxpayers cover a certain amount of qualified adoption costs per child. The credit begins to incrementally decrease at certain income levels and completely phases out once your modified adjusted gross income (MAGI) exceeds the given threshold for that tax year. For the 2024 tax year, the credit maxes out at $16,810 and is phased out at MAGI of $292,150 or more.

 

Tax credits for low-to-middle-income households

 

7. Earned income tax credit

The earned income tax credit (EITC) is a refundable tax break for low-income taxpayers with and without children. For 2024, the credit ranges from $632 to $7,830, depending on how many kids you have, your marital status, and how much you made.

 

8. Charitable donation deduction

If you itemize, you may be able to write off the value of qualifying charitable gifts — whether they’re in cash or property, such as clothes or a car — from your taxable income. Per the IRS, you can generally deduct up to 60% of your adjusted gross income.

 

9. Medical expenses deduction

In general, you can write off qualified, unreimbursed medical expenses that are more than 7.5% of your adjusted gross income for the tax year.

 

10. Deduction for state and local taxes

You may deduct up to $10,000 ($5,000 if married filing separately) for a combination of property taxes and either state and local income taxes or sales taxes through a tax break known as the SALT deduction.

 

11. Mortgage interest deduction

The mortgage interest tax deduction is touted as a way to make homeownership more affordable. It cuts the federal income tax that qualifying homeowners pay by reducing their taxable income by the amount of mortgage interest they pay.

 

12. Gambling loss deduction

Gambling losses and expenses are deductible only to the extent of gambling winnings. So, spending $100 on lottery tickets isn’t deductible — unless you win, and report, at least $100, too. You can’t write off more than the amount you win.

 

13. IRA contributions deduction

You may be able to deduct contributions to a traditional IRA, though how much you can deduct depends on whether you or your spouse is covered by a retirement plan at work and how much you make.

 

14. 401(k) contributions deduction

The IRS doesn’t tax what you divert directly from your paycheck into a traditional 401(k). In 2024, you can contribute a maximum of $23,000 ($30,500 if 50 or older). These retirement accounts are usually sponsored by employers, although self-employed people can open their own 401(k)s.

 

Tax credits for investing in retirement

 

15. Saver’s credit

The saver's credit runs 10% to 50% of up to $2,000 ($4,000 if filing jointly) in contributions to an IRA, 401(k), 403(b) or certain other retirement plans. The percentage depends on your filing status and income.

 

Tax credits for education

 

16. Health savings account contributions deduction

Contributions to HSAs are tax-deductible, and the withdrawals are tax-free, too, as long as you use them for qualified medical expenses.

 

17. Self-employment expenses deduction

There are many valuable self-employment tax write-offs for freelancers, contractors and other self-employed people, including tax breaks for mileage, business insurance premiums and business meals and travel.

 

18. Home office deduction

If you use part of your home regularly and exclusively for business-related activity, the IRS lets you write off certain home office deductions for associated rent, utilities, real estate taxes, repairs, maintenance and other related expenses.

 

19. Educator expenses deduction

If you’re a schoolteacher or other eligible educator, you can deduct up to $300 spent on classroom supplies. Spouses who are both educators and file jointly get a deduction of $300 each, making them eligible to claim up to $600 on their return.

 

Tax credits for green purchases

 

20. Solar tax credit

The solar tax credit, also known as the "residential clean energy credit," can get you up to 30% of the installation cost of solar energy systems, including solar water heaters and solar panels.

 

21. Energy efficient home improvement tax credit

The energy efficient home improvement tax credit, revamped under the Inflation Reduction Act, allows homeowners who purchased qualifying home upgrades — such as energy-efficient windows, doors, and heat pumps — to recoup up to $3,200 on those investments when they file their tax returns.

 

22. Electric vehicle tax credit
EV Tax Credit. Some electric vehicles (EVs) and fuel-cell electric vehicles (FCEVs) are eligible for a non-refundable clean vehicle tax credit. If you purchase a qualified EV or FCEV that meets certain manufacturing and quality standards, you may receive up to $7,500 for a new vehicle or $4,000 for a used vehicle.