US Tax Deductions in 2026: Every Benefit You Can Claim, Explained

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

You pay US tax as a resident, a citizen abroad or a freelancer, and you want to keep more of it. The 2025 tax law (often called the One Big Beautiful Bill Act) reshaped many deductions from 2026. After reading, you will know which deductions and credits you can claim and how to stack them legally.

United States personal deductions and benefits in 2026: the key figures

Is this guide for you?

Read on if you…

• are a US tax resident or citizen filing Form 1040;
• are a freelancer or founder who wants to cut taxable income legally;
• are a US citizen living abroad and want to use the exclusion or credits.

Probably not your case if you…

• are a non-resident with only US investment income taxed by withholding;
• want deductions for business costs: see business expenses in the United States.

How does the US calculate your taxable income?

Think of it in three steps:

1. Gross income minus "above-the-line" adjustments (retirement savings, HSA, half of self-employment tax, student loan interest) gives your adjusted gross income, or AGI.
2. AGI minus either the standard deduction or your itemized deductions, minus the 20% qualified business income (QBI) deduction if you have one, gives taxable income.
3. Tax at 10% to 37%, minus credits, gives what you owe.

Credits are worth more than deductions. A USD 1,000 deduction saves USD 240 in the 24% bracket. A USD 1,000 credit saves USD 1,000.

Standard deduction or itemize: which saves more?

You pick whichever is higher. Most people take the standard deduction. You itemize on Schedule A only if these add up to more:

Here's the catch for high earners. From 2026, the tax value of itemized deductions is capped at 35% for people in the 37% bracket.

Which credits and benefits can you claim?

Family credits

• Child tax credit: USD 2,200 per child under 17 with an SSN. It phases out above USD 200,000 of income (USD 400,000 joint).
• Child and dependent care credit: improved from 2026, up to 50% of qualifying costs for lower incomes.
• Earned income tax credit: for low and moderate earners, larger with children.
• "Trump accounts": a USD 1,000 government deposit for US children born 2025–2028.

Temporary deductions from the 2025 law (2025–2028)

• No tax on tips: deduction up to USD 25,000 for qualifying tips.
• No tax on overtime: deduction up to USD 12,500 (USD 25,000 joint) for the premium part of overtime pay.
• Car loan interest: up to USD 10,000 on new cars assembled in the US.

These phase out above USD 150,000 of income (USD 300,000 joint).

Education and savings

• American opportunity credit: up to USD 2,500 per student a year.
• Student loan interest: deduction up to USD 2,500.
• Health savings account: contributions deductible if you have a high-deductible plan.

How do you pay less, legally?

Good news: the best tools are boring and reliable.

1. Max out retirement plans. A solo 401(k) lets a freelancer contribute both as employee and employer.
2. Claim the QBI deduction. Many sole proprietors and LLC owners deduct 20% of business profit, now permanent. Your choice of legal form affects it.
3. Bunch donations. Group two years of gifts into one to beat the standard deduction, perhaps via a donor-advised fund.
4. Pick your state. Nine states have no wage tax. See the full picture in our US tax landscape overview.
5. Choose exclusion or credit abroad. Citizens abroad compare the foreign earned income exclusion with the foreign tax credit. In high-tax countries, the credit often wins. More in our guide to US tax incentives for expats and digital nomads.

Residents vs non-residents: what changes?

Resident aliens and citizens get every deduction above. Non-resident aliens filing Form 1040-NR cannot take the standard deduction, except students and apprentices from India under the treaty. They may deduct state taxes and charitable gifts to US charities on income connected with a US business. Most credits, including the child tax credit, require residency or an SSN. Leaving the US can also trigger an exit tax: see ceasing your US tax residency.

Common mistakes (and what they cost)

• Itemizing by habit → If your deductions are below the standard deduction, you pay more tax for nothing.
• Missing the new 2026 non-itemizer charity deduction → You lose up to USD 2,000 of deductions for a couple.
• Claiming a child without a valid SSN → The IRS denies the credit and may bar you for two years.
• Using the exclusion in a high-tax country → You lose foreign tax credits you could carry forward for ten years.
• Forgetting the solo 401(k) deadline → The plan must usually be set up by year-end to accept employee deferrals for that year.

Frequently asked questions

What is the standard deduction for 2026?

For tax year 2026 the standard deduction is USD 16,100 for single filers and married people filing separately, USD 32,200 for married couples filing jointly, and USD 24,150 for heads of household. People aged 65 or over or blind add an extra amount, and seniors can also claim the temporary USD 6,000 deduction.

Is the SALT deduction still capped in 2026?

Yes, but at a higher level. The cap rose from USD 10,000 to USD 40,000 in 2025 and increases by 1% a year, to about USD 40,400 in 2026. It shrinks for incomes above about USD 505,000, but never below USD 10,000. It returns to USD 10,000 in 2030 under current law.

Can I deduct charity if I take the standard deduction?

From 2026, yes. Non-itemizers can deduct cash gifts to qualified charities up to USD 1,000, or USD 2,000 for married couples filing jointly. Gifts to donor-advised funds and private foundations do not qualify. Itemizers instead face a new floor of 0.5% of AGI before gifts count.

Can US citizens abroad claim US deductions?

Yes. Citizens and resident aliens living abroad file Form 1040 and get the standard deduction and credits like anyone else. They can also exclude foreign earnings up to USD 132,900 in 2026 or claim the foreign tax credit. Income excluded under the exclusion still pushes remaining income into higher brackets.

Do non-residents get the standard deduction?

Generally no. Non-resident aliens filing Form 1040-NR must itemize, and only deductions connected to US business income are allowed, plus state taxes and US charitable gifts. Students and business apprentices from India are a treaty exception. Married non-residents also cannot file jointly unless they elect to be treated as resident.

What is the QBI deduction?

The qualified business income deduction lets owners of sole proprietorships, partnerships, S corporations and many LLCs deduct up to 20% of their business profit. The 2025 law made it permanent. Above certain income levels, limits apply for service businesses such as consulting, and based on wages and assets.

Related guides

• Business expenses in the United States
• US tax incentives for expats and digital nomads
• Legal forms of business in the United States
• US specific taxes
• US tax landscape overview
• Personal tax deductions and benefits in Ireland
• All country tax guides

Sources

• IRS – Publication 17, Your Federal Income Tax
• IRS – One Big Beautiful Bill provisions
• IRS – Credits and deductions for individuals
• IRS – Publication 54, Tax Guide for US Citizens and Resident Aliens Abroad
• Congress.gov – Public Law 119-21
• US Code – Title 26 (Internal Revenue Code)

This guide is general information, not personalised tax advice. See how we research and review.