Finance Maxxing
Deductions & Credits
Above-the-Line Deductions
Deductions taken before AGI, regardless of itemizing.
Above-the-line deductions reduce your AGI and are available whether you take the standard deduction or itemize. They are particularly powerful because lowering AGI can unlock other benefits.
Key Above-the-Line Deductions
| Deduction | 2025 Limit | Notes |
|---|---|---|
| Traditional 401(k) | $23,500 ($31,000 if 50+) | Employer plan |
| Traditional IRA | $7,000 ($8,000 if 50+) | Income limits for deductibility |
| HSA contributions | $4,300 / $8,550 | Requires HDHP |
| Student loan interest | $2,500 | Phases out at higher income |
| Self-employment tax | 50% of SE tax | Deduct employer-equivalent portion |
| Charitable (non-itemizers) | $300 ($600 MFJ) | Cash only, to 501(c)(3) |
Why Above-the-Line Is Better
- Available to all taxpayers (even those taking the standard deduction)
- Reduces AGI, which can:
- Lower the 7.5% floor for medical expense deduction
- Keep you below phase-out thresholds for IRA, Roth, credits
- Reduce income-driven student loan payments
- Reduce or eliminate NIIT exposure
Sources
More in Deductions & Credits
Standard Deduction
Fixed deduction amount based on filing status.
Itemized Deductions
Schedule A deductions that replace the standard deduction.
SALT Deduction
State and local tax deduction, capped at $40,000 for 2025.
Mortgage Interest Deduction
Deduction for interest on up to $750K of mortgage debt.
Charitable Contributions
Tax deduction for donations to qualifying organizations.
Student Loan Interest Deduction
Up to $2,500 above-the-line deduction.
Medical Expense Deduction
Deductible medical costs exceeding 7.5% of AGI.