If you are like the tax attorneys at Durfee Law Group, maximizing your tax refund in 2025 is likely at the top of your mind. Knowing which deductions to claim can make a significant difference in the amount of money you get back from the IRS and how much you have to pay in taxes. Here are the top tax deductions to consider for the 2024 tax year when you are asking yourself, “How can I maximize my tax refund in 2025?”
1. Standard Deduction
The standard deduction is a no-questions-asked reduction in taxable income available to all taxpayers who do not itemize their deductions. For the 2024 tax year, the standard deduction amounts are:
Single filers: $14,600
Married filing jointly: $29,200
Head of household: $21,900
If your total itemized deductions are less than the standard deduction, taking this option simplifies your filing process and still reduces your taxable income.
2. Charitable Contributions
Donations to qualified charitable organizations can be deducted if you itemize your taxes. Keep records of monetary donations, receipts for goods donated, and acknowledgments from the charities. For 2024, taxpayers may deduct up to 60% of their adjusted gross income (AGI) for cash donations.
What are some examples of charitable contributions?
Monetary Contributions
Cash Donations: Giving money directly to charities, non-profits, or individuals in need.
Recurring Donations: Setting up monthly or annual contributions to an organization.
Fundraising Participation: Donating to support fundraisers or events like marathons or charity galas.
Goods and Supplies
Food Donations: Giving non-perishable food items to food banks or community kitchens.
Clothing Donations: Providing gently used clothing to shelters or second-hand stores.
Toys and Books: Contributing items for children through drives or libraries.
Household Items: Donating furniture, electronics, or appliances to organizations that help families in need.
Time and Skills
Volunteering: Offering time to help at shelters, community centers, or events.
Professional Services: Providing expertise such as legal advice, medical services, or educational training for free or at reduced rates.
Mentorship: Guiding individuals in need of career, educational, or life advice.
Specialized Contributions
Scholarships: Funding education for students through direct contributions or organized programs.
Real Estate or Vehicles: Donating property or cars to charities that can use or sell them.
Art and Cultural Items: Contributing artwork, antiques, or historical items to museums or organizations.
Organizational Support
Corporate Donations: Companies giving funds, resources, or matching employee contributions.
Sponsorships: Supporting community projects, events, or causes financially or materially.
Health-Related Contributions
Blood and Plasma Donations: Contributing to blood banks or medical organizations.
Organ Donation: Registering as an organ donor or donating organs after death.
Hair Donations: Donating hair for wigs used by cancer patients or those with medical conditions.
Planned Giving
Bequests in Wills: Allocating assets or money to charities in a will.
Trusts and Endowments: Setting up financial vehicles for long-term charitable giving.
Environmental Contributions
Land Donations: Providing land to conservation organizations.
Tree Planting: Contributing funds or time to reforestation projects.
Recycling Drives: Organizing or donating to programs that recycle materials for community use.
3. Medical and Dental Expenses
You can deduct unreimbursed medical and dental expenses exceeding 7.5% of your AGI.
Eligible expenses include:
- Doctor visits
- Prescription medications
- Medical equipment
- Insurance premiums (if paid out-of-pocket)
4. State and Local Taxes (SALT)
Taxpayers can deduct state and local income, sales, and property taxes up to a combined limit of $10,000. If you paid significant state or local taxes in 2024, this deduction can reduce your federal taxable income.
5. Mortgage Interest
Homeowners can deduct mortgage interest on loans up to $750,000 ($375,000 if married filing separately) for homes purchased on or after December 16, 2017. This deduction also applies to interest paid on home equity loans or lines of credit if the funds were used for substantial home improvements. Higher limitations ($1,000,000 or $500,000 if married filing separately) apply when you are deducting mortgage interest from indebtedness incurred before December 16, 2017.
6. Student Loan Interest
Borrowers paying off student loans can deduct up to $2,500 in interest, provided their income falls below the threshold. If not, then the deduction is reduced and eventually eliminated depending on your modified adjusted gross income (MAGI).
What is the student loan interest deduction phaseout for 2024?
According to the IRS's Publication 970, for 2024 returns, the amount of your student loan interest deduction is phased out gradually if your MAGI is between $80,000 and $95,000 ($165,000 and $195,000 if you file a joint return).
Source:
7. Retirement Account Contributions
Contributions to traditional IRAs, 401(k)s, and other retirement plans are tax-deductible. For 2024, the contribution limits are:
401(k): $22,500 (or $30,000 if age 50 or older)
Traditional IRA: $6,500 (or $7,500 if age 50 or older)
New Contribution Rules for 2025: Starting in 2025, if you are 60 to 63 years old you can contribute the greater of either $10,000 or 50% more than the regular catch-up contributions to 401(k), 403(b), and governmental 457(b)plans. For SIMPLE plans, the catch-up contribution for the same age group will be the greater of $5,000 or 50% of the catch-up contribution limit.
Along with these changes, there are new exceptions to the 10% additional tax for early or pre 59 ½ distributions. The exceptions are as follows:
• Certain emergency expenses up to $1,000, can repay within 3 years (optional provision in employer’s plan)
• Pension-linked emergency savings account (optional provision in employers plan and as described in the Act)
• Domestic abuse survivor
• Terminal Illness
• Qualified disaster recovery, up to $22,000, can be repaid within 3 years
• Qualified long-term care
8. Educator Expenses
Teachers and eligible educators can deduct up to $300 for unreimbursed classroom expenses. For married educators filing jointly, the limit increases to $600 if both spouses qualify.
9. Child and Dependent Care Expenses
If you paid for childcare or dependent care to enable you (and your spouse, if filing jointly) to work or look for work, you may qualify for a tax credit. Eligible expenses include daycare, after-school programs, and in-home care for dependents.
10. Energy Efficiency Home Improvements
Take advantage of deductions and credits for energy-efficient upgrades made to your home in 2024. Examples include:
Solar Panels
Tax Benefit: The Investment Tax Credit (ITC) allows you to deduct a percentage of the cost of installing solar panels from your federal taxes.
Eligibility: The system must be installed on your primary or secondary residence.
Benefit: Typically, 30% of the installation cost for systems installed by 2032, and then a gradual decrease.
Energy-Efficient Windows
Tax Benefit: The Nonbusiness Energy Property Credit offers a tax credit for qualifying energy-efficient windows, doors, and skylights.
Eligibility: The products must meet specific energy efficiency standards set by the U.S. Department of Energy.
Benefit: A credit of up to 10% of the cost, up to a $500 limit for all years combined.
Insulation
Tax Benefit: Adding insulation to your home, such as spray foam, fiberglass, or cellulose, can qualify for the Nonbusiness Energy Property Credit.
Eligibility: The insulation must meet specific energy efficiency requirements.
Benefit: 10% of the cost, up to $500 total for all home improvements.
Energy-Efficient HVAC Systems
Tax Benefit: Energy-efficient heating, ventilation, and air conditioning (HVAC) systems may qualify for the Nonbusiness Energy Property Credit.
Eligibility: The system must be Energy Star-rated or meet other specified standards.
Benefit: Up to $300 for a new furnace or air conditioner.
Geothermal Heat Pumps
Tax Benefit: The Investment Tax Credit (ITC) offers a substantial credit for geothermal heat pump systems.
Eligibility: The system must meet certain criteria for geothermal energy.
Benefit: Similar to solar panels, you can deduct up to 30% of the system's installation cost.
Wind Turbines
Tax Benefit: Like solar and geothermal, wind turbines can qualify for the Investment Tax Credit (ITC).
Eligibility: Wind systems must be installed in your primary or secondary residence.
Benefit: You can deduct 30% of the installation cost for turbines.
Electric Vehicle (EV) Charging Stations
Tax Benefit: Installing an EV charging station at your home can qualify for a tax credit under the Alternative Fuel Vehicle Refueling Property Credit.
Eligibility: The charging station must meet the necessary requirements.
Benefit: Up to 30% of the installation cost, up to $1,000 for residential installations.
Energy-Efficient Roofing
Tax Benefit: Certain types of cool roofs that reduce heat absorption can qualify for energy efficiency credits.
Eligibility: Must meet Energy Star or equivalent standards.
Benefit: Up to $500 for energy-efficient improvements.
Water Heaters (Energy Efficient)
Tax Benefit: Energy-efficient water heaters, particularly solar-powered ones, may qualify for a tax credit.
Eligibility: The water heater must meet Energy Star or other energy-efficient standards.
Benefit: A credit of up to $300 for energy-efficient water heaters.
Home Energy Audits
Tax Benefit: In some cases, you may be able to claim a credit or deduction for the cost of conducting a professional energy audit.
Eligibility: The audit must be part of qualifying home improvement projects.
Benefit: Varies depending on state and federal laws.
Cool Roofs
Tax Benefit: Installing a reflective roof that reduces heat gain can qualify under the Nonbusiness Energy Property Credit.
Eligibility: The roof must meet specific energy efficiency standards.
Benefit: Similar to other energy-efficient improvements, this may offer up to 10% of the cost.
Residential Energy Efficiency Property Credit
Tax Benefit: This is a general credit for qualifying energy-efficient improvements such as insulation, windows, and doors, as well as more complex upgrades.
Eligibility: Products must meet criteria set by the IRS or the Department of Energy.
Benefit: A variety of credits that can be used to cover a portion of the improvement costs.
11. Small Business Tax Deductions
If you own a small business, there are numerous deductions available to help lower your taxable income. Some key deductions include:
Home Office Deduction
If you use part of your home exclusively for business, you can deduct related expenses such as utilities, rent, and maintenance. Use caution here because it may not be worth the long-term consequences involved (i.e. potential depreciation recapture tax when you sell your home).
Business Vehicle Expenses
Deduct mileage, fuel, and maintenance costs for vehicles used for business purposes. Alternatively, use the IRS standard mileage rate.
Office Supplies and Equipment
Items like printers, paper, and computers purchased for your business are deductible.
Professional Services
Fees paid to accountants, lawyers, or consultants for business-related services can be deducted.
Marketing and Advertising
Costs for promoting your business, including digital ads, website development, and print materials, are fully deductible.
Employee Salaries and Benefits
Wages, health insurance, and retirement contributions for employees can be claimed as business expenses.
Section 179 and Bonus Depreciation (Section 168(k))
Small businesses can significantly reduce taxable income by taking advantage of Section 179 and bonus depreciation under Section 168(k):
Section 179 Deduction
This allows businesses to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year, up to a limit of $1,220,000 for 2024. Eligible items include machinery, vehicles, and office equipment.
Bonus Depreciation
Under Section 168(k), businesses can immediately deduct 60% of the cost of eligible new and used assets placed in service in 2024. This is particularly useful for high-cost purchases that exceed the Section 179 limit.
While Sec. 179 offers a potentially larger deduction in the first year, it comes with limitations. With 168k bonus depreciation, you may get a lower deduction percentage, but it is more simple to calculate. In general, you should maximize your Sec. 179 deduction first, and then claim bonus depreciation on whatever is left over.
Section 179 deductions allow businesses to deduct the cost of qualifying property in the year it is placed in service, rather than spreading the deduction over the property's useful life.
Limits for 2025
Deduction Limit: In 2024, the limit is $1,220,000 (indexed for inflation annually).
Phase-out Threshold: For 2024, $3,050,000 (also indexed for inflation). The deduction starts to phase out dollar-for-dollar if total property purchases exceed this threshold.
Source
Qualifying Property
Tangible personal property (e.g., machinery, equipment, vehicles under certain limits).
Off-the-shelf computer software.
Certain improvements to nonresidential real property (e.g., HVAC systems, roofs, fire protection systems).
Restrictions
The deduction cannot exceed the business's taxable income for the year. Unused amounts can be carried forward to future years.
Bonus Depreciation allows businesses to take an immediate deduction for a percentage of the cost of qualifying property in the year it is placed in service.
Phase-out of Bonus Depreciation
As of current law (under Donald Trump’s Tax Cuts and Jobs Act of 2017), the bonus depreciation percentage is scheduled to decrease:
2023: 80%
2024: 60%
2025: 40%
2026: 20%
2027 and beyond: 0% (unless legislation extends it).
Qualifying Property
• New or used property with a recovery period of 20 years or less.
• Certain computer software, water utility property, and qualified film, television, or live theatrical productions.
No Income Limitation
Unlike Section 179, there is no taxable income limit. Losses can be generated or increased using bonus depreciation.
Interaction Between Section 179 and Bonus Depreciation
Businesses can use Section 179 first to maximize immediate deductions and then apply bonus depreciation to remaining qualifying property. Section 179 is subject to annual limits, while bonus depreciation has no such cap, making the latter more flexible for large investments.
Example of how they work together
Let's say a business purchases a new piece of equipment in 2024. The equipment costs $100,000, and the business is eligible to take advantage of both Section 179 and Section 168(k) bonus depreciation.
Section 179 Depreciation (2024 Rules)
Section 179 allows a business to expense the cost of qualifying property in the year it is placed into service, up to a limit.
In 2024, the maximum Section 179 deduction is $1,220,000 (with a phase-out threshold of $3,050,000). This means if a business buys more than $3.05 million in qualifying equipment, the Section 179 deduction begins to phase out.
For this scenario: The equipment cost is $100,000, which is below the $1,220,000 limit. So, the business can fully expense the $100,000 under Section 179 in 2024, assuming the property is used more than 50% for business.
Outcome under Section 179: The business can deduct the entire $100,000 from its taxable income in 2024.
Section 168(k) Bonus Depreciation (2024 Rules)
Section 168(k) allows businesses to take a bonus depreciation of 80% in the first year for qualifying property placed into service after September 27, 2022, and before January 1, 2024. For 2024, the bonus depreciation percentage drops to 60%, as part of a gradual phase-out (60% for 2024, 40% for 2025, and so on). The property must meet the criteria of "new" property and be eligible for the deduction. If the business decides not to use Section 179 and instead uses Section 168(k), it can deduct 60% of the cost of the equipment upfront, and the remaining 40% will be depreciated over time according to the regular depreciation schedule.
For this scenario: The business purchases $100,000 worth of equipment. Using Section 168(k) (without Section 179), the business can immediately take a 60% bonus depreciation on the equipment, which equals $60,000. The remaining 40% of the equipment's cost, $40,000, will be depreciated using regular depreciation rules (typically over a 5-year period for equipment).
Outcome under Section 168(k): The business can deduct $60,000 in the first year as bonus depreciation, and the remaining $40,000 will be depreciated over the next few years.
Comparison:
Section 179: The business deducts the entire $100,000 in the first year.
Section 168(k): The business can only deduct $60,000 upfront and must depreciate the remaining $40,000 over time.
Key Takeaway:
Section 179 is generally more advantageous for smaller purchases because it allows a full deduction in the first year, up to the limits. Section 168(k) bonus depreciation is beneficial if the business prefers a larger deduction in the first year (60%) and doesn’t want to worry about phase-outs, but will still need to depreciate the remaining portion over several years.
In this example, the business could benefit more from Section 179 if the full $100,000 deduction in the first year is more useful, while Section 168(k) would be better if they prefer to spread the depreciation across a few years.
Planning Considerations for 2025 for Sections 179 and 168k
Timing of Purchases
Consider the phase-out of bonus depreciation to accelerate asset purchases if possible before the deduction percentage decreases further. Keep in mind that Donald Trump's campaign included talk about the extension of the Tax Cuts and Jobs Act (TCJA). This could potentially mean a return of 100% bonus depreciation and an increase in Section 179 deductions.
Combining Deductions
Strategically use Section 179 and bonus depreciation to optimize deductions based on business income and cash flow needs.
State Conformity
Many states do not fully conform to federal Section 179 or 168(k) rules, so check state-specific tax laws.
Legislative Changes
Monitor for potential legislative updates, as Congress could modify these provisions. With the election of Donald Trump, changes related to these Sections is likely if he is able to follow through on related campaign promises.
Final Thoughts
Understanding these deductions can help you lower your taxable income and maximize your refund in 2025. By planning ahead and keeping accurate records throughout the year, you'll set yourself up for a stress-free tax filing experience and a potentially larger refund. Always consult a tax professional to ensure you're taking advantage of every deduction available to you and to confirm your eligibility for these benefits. Here at Durfee Law Group, our tax professionals take a wholistic approach to your tax planning and focus on what we can do to help you reach your tax goals.
Top Tax Deductions to Maximize Your Refund in 2025 © 2025 by Michael J. Koberlein is licensed under CC BY 4.0 
Top Tax Deductions to Maximize Your Refund in 2025