Yes. Not all tax deductions require you to itemize.
Some deductions can reduce your taxable income even if you claim the standard deduction. These are commonly called above-the-line deductions or adjustments to income. They're especially valuable because they lower your Adjusted Gross Income (AGI), which can also help you qualify for other tax benefits.
What Are Above-the-Line Deductions?
Above-the-line deductions are specific expenses that the IRS allows you to subtract from your gross income before calculating your AGI.
Because these deductions are available whether you itemize or claim the standard deduction, many taxpayers can benefit from them.
Above-the-Line Deductions Available for Tax Year 2026
The following deductions may be available on 2026 tax returns (filed in 2027), subject to IRS requirements and income limitations.
Senior Bonus Deduction
Eligible taxpayers who are age 65 or older may qualify for a $6,000 Senior Bonus Deduction.
Key rules include:
- Available regardless of whether you itemize or claim the standard deduction.
- Begins to phase out when modified AGI exceeds:
- $75,000 for Single filers
- $150,000 for Married Filing Jointly filers
- Married Filing Separately taxpayers are not eligible.
Deduction for Qualified Tip Income
Certain taxpayers may deduct up to $25,000 of qualifying tip income as an above-the-line deduction.
This deduction is generally unavailable when income exceeds:
- $150,000 for Single filers
- $300,000 for Married Filing Jointly filers
Additional eligibility requirements may apply based on IRS guidance.
Overtime Pay Deduction
Eligible taxpayers may deduct up to:
- $12,500 of qualifying overtime compensation per individual
- $25,000 total if both spouses have qualifying overtime income on a joint return
Income limitations and other requirements may apply.
Car Loan Interest Deduction
Taxpayers may be able to deduct up to $10,000 of qualifying vehicle loan interest paid on a personal-use vehicle.
To qualify:
- The loan must generally be for a new vehicle.
- The vehicle's final assembly must have occurred in the United States.
- The loan must have been originated after December 31, 2024.
- Additional limitations and eligibility rules may apply.
Other Above-the-Line Deductions That May Be Available
In addition to the deductions above, taxpayers may still qualify for several long-standing adjustments to income, including:
- Self-employed health insurance premiums
- Deduction for one-half of self-employment tax
- Health Savings Account (HSA) contributions
- Certain retirement plan contributions
- Penalties paid for early withdrawal of savings, such as certificates of deposit (CDs)
- Student loan interest
- Qualifying alimony payments for eligible agreements
- Moving expenses for eligible military personnel
- Educator expenses
- Certain business expenses for reservists, performing artists, and fee-based government officials
Why Does Lowering AGI Matter?
Reducing your AGI can do more than lower your taxable income.
A lower AGI may help you:
- Qualify for additional tax credits
- Increase eligibility for certain deductions
- Reduce income-based phaseouts
- Potentially lower your overall tax liability
That's why it's important to review all available adjustments to income, even if you don't plan to itemize deductions.
How to Claim Above-the-Line Deductions
Our software will guide you through interviews and worksheets designed to identify deductions you may qualify for. Be prepared to provide supporting information, such as:
- Form W-2s
- Form 1099s
- Student loan interest statements
- HSA contribution records
- Retirement contribution records
- Vehicle loan interest information, if applicable
Keeping accurate records can help ensure you receive every deduction you're entitled to claim.