The Ten Best Tax Breaks That Currently Exist Today

The U.S. tax code runs thousands of pages, and most of it defines what counts as income and what doesn’t. That’s where the tax breaks live. Whether you earn $30,000 or $300,000, you’re taxed under the same federal tax brackets, but how you earn the money and what you do with it changes how much of it the IRS sees.

The short version: different kinds of income are taxed at different rates, and certain moves (contributing to a retirement account, holding an investment past a year, selling the house you live in) take income off the table entirely. Knowing which moves count is worth hundreds or thousands of dollars a year, and the earlier you learn them, the more years you get to invest the difference.

One definition before the list. A credit reduces your tax bill directly: a $1,000 credit saves you $1,000. A deduction reduces the income you’re taxed on, so a $1,000 deduction saves you $220 in the 22% bracket. An exclusion keeps the income off your return in the first place. Credits beat deductions, and exclusions beat both.

Here are the ten breaks, with the 2026 numbers, and how to tell whether you qualify.

What Changed For 2026

The One Big Beautiful Bill Act, signed July 4, 2025, rewrote a chunk of the individual tax code, and the IRS published the inflation-adjusted 2026 figures in October 2025. The standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household. The tax brackets keep the 10% through 37% rates, with the 22% bracket starting at $50,400 single and $100,800 joint.

Three changes matter most for this list. The 20% qualified business income deduction, which was scheduled to expire after 2025, is now permanent. Four temporary deductions for tips, overtime pay, seniors, and car loan interest apply for tax years 2025 through 2028. And the Saver’s Credit is in its final year; starting with 2027 contributions, the government deposits a matching contribution into your retirement account instead. The child tax credit is $2,200 per child and the SALT cap is $40,400 for 2026, neither of which is on this list but both of which show up on the most common deductions page.

The Saver’s Credit (officially the Retirement Savings Contributions Credit) is a tax credit, which means dollar-for-dollar savings off your tax bill, for lower-income earners who meet three tests:

• At least 18 years old
• Not a full-time student
• Not claimed as a dependent on someone else’s return

To earn it, you put money into a workplace retirement plan, an IRA, or an ABLE account. The credit applies to the first $2,000 of contributions per person ($4,000 if married filing jointly), and the rate depends on your income. The 2026 IRA limit is $7,500 and the 401(k) limit is $24,500, so the credit only ever covers the first slice of what you save.

The table below shows how the credit works for different filing statuses and incomes for tax year 2026:

One catch the table doesn’t show: the credit is nonrefundable. It can take your tax bill to zero, but it can’t push it below zero. A single filer with $24,000 of income and the $16,100 standard deduction owes about $790 in federal tax before credits, so a $1,000 Saver’s Credit is worth $790 to them, not $1,000. If you also qualify for the Earned Income Tax Credit, which is refundable, that one pays out in full regardless.

When You’re Likely To Qualify

• The year you graduate from college and work a partial year
• During an extended maternity or paternity leave
• The first year you start a business or go freelance and show low profit
• Any year you return to work after a long stretch of unemployment
• If you’re married and one spouse goes back to school

Why This Tax Break May Be Accessible To You

The income test uses your adjusted gross income, and pre-tax 401(k) contributions lower AGI. A single person who earns $45,000 and contributes $5,000 to a traditional 401(k) has an AGI of $40,000, which is under the $40,250 cutoff, so the first $2,000 of that contribution earns a $200 credit. Contribute $6,000 and you’re at $39,000, still in the 10% tier. The IRA contribution and income limits page has the deduction rules if you’re using an IRA instead of a workplace plan.

Deadlines matter this year. Workplace plan contributions have to be in by December 31, 2026. IRA contributions for 2026 can go in until April 15, 2027. Both count toward the 2026 credit.

2027 And Beyond: The Saver’s Match

Tax year 2026 is the last year for the Saver’s Credit. The SECURE 2.0 Act replaces it with the Saver’s Match starting with 2027 contributions, and Treasury and the IRS published the first rules on August 7, 2026. The match is 50% of the first $2,000 you contribute to an IRA or workplace plan, up to $1,000 per person, and the government deposits it directly into your retirement account rather than reducing your tax bill. That fixes the nonrefundable problem above; a worker who owes no tax gets the full $1,000.

The income phase-outs are lower than the current credit’s: $20,500 to $35,500 for single filers, $30,750 to $53,250 for heads of household, and $41,000 to $71,000 for joint filers, indexed after 2027. The first matches will be paid in 2028 for 2027 contributions, and Treasury plans to launch TrumpIRA.gov on January 1, 2027 with the list of accounts that can receive them. The rules are still proposed (Notice 2026-48; comments are due October 5, 2026), so the claim process can still change before launch.

2. Capital Gains Exclusions on the Sale of a Primary Home

When you sell your primary residence, you can keep up to $250,000 of profit ($500,000 for a married couple filing jointly) without paying capital gains tax on it. You qualify if you owned the home and lived in it as your main home for at least two of the five years before the sale, and you haven’t used the exclusion on another home in the two years before this sale. The two years don’t have to be consecutive.

Most homeowners use this a few times in their lives without thinking about it. Used deliberately, it’s one of the few ways to earn a living without paying income tax on the earnings. Buy a home that needs work, live in it while you fix it up, sell after two years, and the profit is excluded. Our mortgage calculator will tell you what you can afford to start with.

When You Are Likely To Qualify For The Capital Gains Exclusion

Fixing up a house is hard work, but anyone who buys with the intention of improving it and staying two years can qualify. The math behind a live-in flip is laid out in this post from Chad Carson, and house hacking (renting out part of the home while you live in it) can cover the mortgage while you wait out the two years. Have DIY skills or a realistic renovation budget before you commit.

Why This Tax Break May Be Accessible To You

FHA, conventional, and VA loan programs let buyers close with a few thousand dollars down, or nothing down for eligible veterans. If you can add sweat equity, a live-in flip can produce tens of thousands of dollars of tax-free gain every two years. The gain counts toward the $500,000 joint exclusion only; anything above it is taxed as a long-term capital gain (see break number 4).

3. Short-Term House Rentals

If you rent out your primary residence for 14 days or fewer during the year, the rental income is tax-free and you don’t report it at all. The IRS rule is that a home rented fewer than 15 days is treated as personal use: no income reported, no rental expenses deducted. Tax professionals call it the “Augusta rule” after the Masters tournament, where homeowners rent to visitors for one week a year.

The 2026 World Cup ran June 11 to July 19 across 11 U.S. host cities, and homeowners near those stadiums who rented for two weeks or less owe nothing on that income when they file their 2026 returns. The same applies to the Super Bowl, SXSW, a college graduation weekend, or any event that fills hotels near you. Two weeks of event pricing can cover several months of mortgage payments, and Airbnb and Booking.com both handle short stays.

When This Is Worthwhile

• When you can rent out your home for 14 days or fewer in a calendar year
• When your home is near a major event, a stadium, a university, or a tourist draw

Why This Tax Break May Be Accessible To You

Wherever you live, it’s worth knowing you can rent your home for 14 days without owing tax. Even a rural home can land in the path of a solar eclipse, a music festival, or a group looking for a quiet week away. The side hustle list has other ways to earn from a spare room, but none of them are tax-free the way this one is.

The line is hard. Rent for 15 days or more and every dollar from day one is taxable rental income, reported on Schedule E with the expenses to match.

The tax code is built to reward long-term investing. Profits on stocks, ETFs, mutual funds, and other investments held more than a year are taxed at long-term capital gains rates (0%, 15%, or 20%) instead of the ordinary income rates that top out at 37%. Qualified dividends get the same treatment.

For 2026, the 0% rate applies to taxable income up to $49,450 for single filers, $98,900 for married couples filing jointly, and $66,200 for heads of household. Taxable income is what’s left after the standard deduction, so a married couple with $131,100 of total income ($32,200 standard deduction plus $98,900) and all of it from long-term gains and qualified dividends would owe $0 in federal income tax. The full 2026 capital gains brackets show where 15% and 20% start.

Check out the full breakdown of the capital gains tax brackets here >>

When You May Qualify For This Tax Break

• When you sell long-held investments during a sabbatical year, early retirement, or another low-income year
• When one spouse leaves the workforce and household income drops
• When you’re a student or early-career worker with a taxable brokerage account and a small gain

Why This Tax Break May Be Accessible To You

If you hold long-term investments in a brokerage account, plan the sale, not just the purchase. A year of unemployment, a gap year, or the first year of retirement is the cheapest time to realize gains, and you can “harvest” gains up to the 0% ceiling and immediately rebuy to reset your cost basis. In a high-income year the opposite move, tax-loss harvesting, does the same job from the other direction. Check the thresholds before you sell; the gain itself counts toward taxable income and can push part of it into the 15% bracket.

A lot of these breaks go to people who invest, and this one is the landlord’s. When you invest in real estate and rent it out, the IRS lets you deduct “depreciation,” the assumed wear on the building (not the land) spread over 27.5 years for residential property. A $275,000 building produces a $10,000 deduction every year, on top of mortgage interest, repairs, insurance, property taxes, and management software.

The result is that a rental can put cash in your pocket while showing little or no taxable profit. The One Big Beautiful Bill also restored 100% bonus depreciation, permanently, for qualifying property acquired after January 19, 2025. That doesn’t cover the building itself, but it does cover shorter-lived components like appliances, flooring, and land improvements, which a cost segregation study can carve out and write off in year one.

When You May Qualify For This Tax Break

Anyone who owns rental property, or rents out part of the home they live in, can claim depreciation on the rented portion. The effective tax rate on rental income is what makes real estate compare well with other investments. One caveat: depreciation lowers your cost basis, and the IRS recaptures it at up to 25% when you sell, unless you roll the sale into another property.

Why This Tax Break May Be Accessible To You

Buying a first rental isn’t easy, and most people get there by “house hacking,” taking on roommates, or converting a former home into a rental after moving. Each of those puts you on the depreciation schedule from the first month a tenant moves in.

Before you decide this one isn’t for you, check whether any of your side income counts as a business. Freelancers, Uber and Lyft drivers, Etsy sellers, tutors, and anyone with a Schedule C are business owners for this purpose. The qualified business income (QBI) deduction lets you skip tax on 20% of that profit, and as of 2026 it’s permanent.

Say Tia earns $70,000 at her day job and $20,000 of profit from an Etsy printable business. The QBI deduction removes roughly 20% of the Etsy profit from her taxable income, so she’s taxed on about $16,000 of it (a bit less than $4,000 off after the self-employment tax adjustment) plus her $70,000 salary. In the 22% bracket, that’s roughly $850 saved for filling in one line on Form 8995.

The 2026 rules, from the IRS and the One Big Beautiful Bill: the full deduction is available to anyone with taxable income up to $201,750 (single) or $403,500 (joint). Above that, limits based on wages paid and property owned phase in over a wider range than before ($75,000 single / $150,000 joint, so the deduction fully phases out at $276,750 / $553,500 for service businesses). And there’s a new floor: if you have at least $1,000 of QBI from a business you actively run, your deduction is at least $400, even if the 20% math produces less. The QBI glossary page covers the details.

When You May Qualify For This Tax Break

Working for yourself isn’t for everyone, but earning money as a business rather than an employee is unusually tax-efficient right now, and a “side business” doesn’t have to be large to count. The best side business tax deductions stack on top of QBI, and a solo 401(k) lets a side hustler shelter far more than the IRA limit.

Why This Tax Break May Be Accessible To You

Growing income while containing expenses is the clearest path to wealth, and a business with any profit qualifies. Whether the business is large or small, it gets the QBI deduction, and the $400 minimum means even a small first-year profit produces a deduction. If you have a business, the year-end checklist for business owners covers the moves to make before December 31.

7–10. The Four New OBBBA Deductions (2025 Through 2028)

The One Big Beautiful Bill added four deductions that didn’t exist before tax year 2025. All four are available whether or not you itemize, all four require a Social Security number on the return (and a joint return if you’re married), and all four are scheduled to end after tax year 2028. Filers who qualified in 2025 claimed them for the first time this past spring; the tax refund data showed the effect.

7. Tips (Up To $25,000)

Workers in occupations the IRS lists as customarily tipped can deduct up to $25,000 of qualified tips per year. The deduction phases out above $150,000 of modified AGI ($300,000 joint). We published the list of 68 tipped occupations when Treasury released it. Tips still count as income for Social Security and Medicare tax and for the Earned Income Tax Credit, which is why the deduction helps and the credit still applies.

8. Overtime (Up To $12,500, Or $25,000 Joint)

The premium portion of overtime pay required by the Fair Labor Standards Act (the “half” in time-and-a-half) is deductible up to $12,500 for single filers and $25,000 on a joint return, with the same $150,000/$300,000 phase-out. Employers report the qualifying amount on your W-2. Overtime that isn’t FLSA-required, such as overtime paid under a union contract above the federal minimum, doesn’t count, so check the W-2 box rather than your pay stubs. Our employment income page explains what does and doesn’t count as wages.

9. Seniors (An Extra $6,000 Per Person)

Anyone who turns 65 by December 31 of the tax year gets an additional $6,000 deduction ($12,000 for a married couple where both spouses qualify), on top of the standard deduction and the existing extra deduction for age. It phases out above $75,000 of modified AGI ($150,000 joint). For a retiree living on Social Security and a modest withdrawal, this can take federal tax to zero, which also makes the 0% capital gains rate easier to reach.

10. Car Loan Interest (Up To $10,000)

Interest on a loan for a new personal vehicle that underwent final assembly in the United States is deductible up to $10,000 a year, for loans originated after December 31, 2024. The phase-out starts at $100,000 of modified AGI ($200,000 joint), and you’ll need the vehicle identification number on your return. Used cars, leases, and vehicles assembled abroad don’t qualify. If you’re deciding between paying cash and financing, the best order of operations for your money still says fund the retirement match first.

Other Credits And Deductions Worth Checking

These didn’t make the top ten because they’re narrower, but several are worth more than the ones above if you qualify. The Earned Income Tax Credit pays up to $8,231 for 2026 and is refundable. The student loan interest deduction is worth up to $2,500 of income, and the education credits cover tuition. An HSA ($4,400 single / $8,750 family for 2026) is the only account that’s deductible going in, tax-free growing, and tax-free coming out for medical costs, and it doubles as a retirement account. A 401(k) contribution up to $24,500 is the biggest deduction most employees will ever take. And if you’re near the standard deduction line, the 10 year-end tax moves post shows how to bunch deductions into one year.

Tax Break FAQ

What’s the difference between a tax break, a tax credit, and a tax deduction?

“Tax break” is the umbrella term. A credit reduces the tax you owe; a deduction reduces the income you’re taxed on; an exclusion keeps income off the return. A $1,000 credit is worth $1,000 to everyone who can use it, while a $1,000 deduction is worth $120 in the 12% bracket and $370 in the 37% bracket. Here’s the longer answer.