Each year, millions of Americans overpay their taxes simply because they aren’t aware of the tax deductions they’re entitled to claim. Whether it’s due to confusing IRS language or subtle rule changes from one tax year to the next, many taxpayers leave money on the table. At ProTaxReturn, we work with individuals, small business owners, and U.S. expats to ensure nothing gets missed. In this 2025 edition, we’re walking you through 12 of the most commonly overlooked tax deductions — and how to use them to maximize your return this season.
1. State Sales Tax Deduction
If you live in a state without income tax — like Florida, Texas, or Washington — you could benefit more by deducting your state sales tax rather than income tax. The IRS allows you to choose one or the other, and for residents of income-tax-free states, sales tax can be a more lucrative option, especially if you made big-ticket purchases like a car or home renovation supplies.
You can use the IRS’s optional sales tax tables or calculate your actual expenses to claim this deduction. Keep in mind, the total deduction for state and local taxes (income, property, and sales) is capped at $10,000.
Need help itemizing deductions accurately? Explore our Tax Services to get it done right.
2. Reinvested Dividends
It’s easy to forget that dividends automatically reinvested into mutual funds or stocks increase your cost basis. When you eventually sell those investments, that higher cost basis reduces your taxable capital gain.
If you ignore your reinvested dividends, you could end up paying taxes on money you never actually gained. Many taxpayers miss this adjustment, especially if they’re not working with a professional tax preparer who digs into their investment statements.
3. Out-of-Pocket Charitable Expenses
Most people remember to deduct large charitable donations, but the little ones often go unclaimed. If you buy supplies for a nonprofit event, pay for parking while volunteering, or drive your car for charity purposes, those costs are tax-deductible.
The IRS even allows you to deduct 14 cents per mile for charity-related driving. These expenses add up over the year — and they’re perfectly legal to include in your itemized deductions. Just be sure to document them.
4. Student Loan Interest Paid by Someone Else
Here’s one many people don’t realize: if a parent or someone else pays off a student loan for you, the IRS treats it as if they gave you the money and you paid the loan yourself. As long as you’re not a dependent and are legally obligated to repay the loan, you may be able to deduct up to $2,500 in student loan interest — even if someone else made the payments.
This can be a major break for young professionals or recent graduates still getting on their feet. If you’re unsure about your eligibility, our Tax Pricing page shows you how affordable expert support can be.
5. Military Moving Expenses
While moving expenses aren’t deductible for most taxpayers anymore, there’s one exception: active-duty military members. If you’re serving and are required to move, you can still deduct unreimbursed expenses like travel, lodging, and the cost of moving your household goods.
This includes shipping your pets, storing belongings, or transporting your car. With the right documentation, these deductions are absolutely legitimate. If you’re stationed overseas, check out our US Expat Tax Filing services to stay compliant while saving.
6. Child and Dependent Care Credit
This credit helps working parents offset the cost of daycare or after-school care for children under 13. What’s often missed is that even if you pay for childcare through a pre-tax FSA at work, you may still qualify to claim expenses over that amount for an additional credit.
For 2025, the credit covers up to $6,000 in qualifying expenses per family, and can shave hundreds off your tax bill — dollar for dollar. The exact amount depends on your income, but the key is to document your expenses and coordinate them with your workplace benefits.
7. Earned Income Tax Credit (EITC)
The EITC is one of the most valuable — and most overlooked — tax credits available. In 2025, eligible individuals and families can receive between $649 and $8,046, depending on income and family size.
Many people assume they don’t qualify, but eligibility changes every year. You might be newly eligible if you lost a job, had reduced income, or had a child. You must file a tax return to claim it, even if you owe nothing. We often help clients recover thousands through this credit — sometimes retroactively for previous tax years.
8. State Income Tax Paid Last Spring
If you owed state income tax when filing your 2024 return and paid it in April 2025, you can deduct that payment on this year’s federal return. Many people forget this because it doesn’t show up on their W-2.
It’s considered a part of your overall state and local tax deduction (capped at $10,000), so make sure it’s included in your itemized totals if you’re not taking the standard deduction.
9. Refinancing Mortgage Points
When you refinance your mortgage, you might pay points to secure a lower rate. These are deductible, but unlike an original home purchase, the deduction must be spread out over the life of the loan.
If you refinance again or sell your home, the remaining unclaimed points become deductible all at once — unless you refinance with the same lender. Homeowners often miss this deduction because they don’t revisit their previous tax filings when they move or refinance.
10. Jury Pay Given to Your Employer
If your employer continues paying your salary while you’re on jury duty, they may ask you to sign over your jury pay. What most don’t realize is that the IRS still counts that money as taxable income.
To avoid being taxed on money you didn’t keep, you’re allowed to deduct the amount of jury pay you turned over to your employer. It’s a simple line item that many taxpayers — and software programs — miss.
11. Home Office Deduction for the Self-Employed
The home office deduction only applies if you’re self-employed and use part of your home regularly and exclusively for business. If that describes you, the IRS offers two methods to calculate the deduction: the simplified method (based on square footage) or the actual expense method.
Whether you’re a full-time freelancer or running a side hustle, this deduction could shave hundreds off your taxable income. If you’re unsure which method is better, our Company Tax Filing Services team can calculate both.
12. Foreign Earned Income Exclusion
For U.S. citizens working abroad, the Foreign Earned Income Exclusion (FEIE) allows you to exclude up to $120,000 in foreign income for 2025. You must meet certain criteria — either spending 330 full days overseas during a 12-month period or establishing a bona fide foreign residence.
In addition, you might also qualify for the foreign housing exclusion if your living costs are high. These rules are complex, and the stakes are high if you get them wrong. Our Expat Tax Filing team specializes in helping Americans abroad stay compliant without overpaying.
Final Thoughts
Tax season doesn’t have to be about stress and missed opportunities. With the right guidance and a careful look at your financial year, you can ensure you’re claiming every deduction you deserve. If you’re tired of guessing your way through filing season — or worried you’re leaving money behind — ProTaxReturn.com is here to help.
Let 2025 be the year you file smarter. Our expert-prepared services are tailored for individuals, families, expats, and business owners who want accuracy, compliance, and maximum savings.
Need help getting started? Visit our Contact Page to speak with a licensed tax expert today.
