If you take time to learn about key tax breaks and keep up with the changes, you could save hundreds — or thousands — of dollars.
Several popular tax breaks that were expanded during the pandemic have expired or returned to regular levels, but you still have many opportunities to save if you know the rules. You may also benefit from some valuable new tax breaks that were introduced or increased in 2023.
You might also be eligible for different tax credits or deductions if you’ve had a recent life change — for example, if your income dropped in 2023 or you retired, started a new job, did some freelance work, took continuing education classes, paid for child care or had out-of-pocket medical expenses.
Here are some frequently overlooked tax credits and deductions — and how you can make the most of them for tax year 2023.
Tax Break for Summer Camp
The child and dependent care tax credithas returned to its usual size after being expanded significantly during the pandemic in 2021. But it can still reduce your tax liability by more than a thousand dollars if you pay for child care while you work.
The credit is worth up to $1,050 for one child or $2,100 for two or more.
Many child-related expenses qualify for the credit. You can count the cost of day care, preschool, nanny services, before- and after-school care and even the cost of summer day camp for children under 13 while you and your spouse work or look for work (overnight camps don’t qualify).
You can also claim the credit for other qualified dependents — which might include parents or grandparents — or outside day care for those you can’t leave alone, says Mark Steber, chief tax information officer for Jackson Hewitt Tax Services.
The credit is worth as much as 35% of up to $3,000 in eligible child care expenses for one child under 13 and up to $6,000 for two or more children.
That percentage shrinks as your income rises, but there is no maximum income limit to qualify.
“Anyone who works and pays for day care could be eligible regardless of income,” Steber says. If your adjusted gross income was more than $43,000 in 2023 the credit is worth 20% of your eligible child care expenses.
For more information, see IRS Publication 503, Child and Dependent Care Expenses.
Tax Credit for College Classes at Higher Income Levels
You don’t need to be a full-time student to get a tax break for taking college classes. You can claim the lifetime learning credit for undergraduate or graduate classes, certificate programs or continuing education classes at eligible educational institutions even if you aren’t working toward a degree.
The credit is worth 20% of up to $10,000 in qualified expenses, with a maximum of $2,000 per tax return. “Qualified expenses include tuition and course materials, fees included in tuition, plus the cost of books, computers and software necessary for the course,” Steber says.
The income limit to qualify for the tax break increased significantly in 2021, says Mark Luscombe, principal analyst with Wolters Kluwer Tax & Accounting.
Now it matches the income limits to qualify for theAmerican opportunity tax credit, which can cut your tax liability by up to $2,500 for each eligible student in their first four years of college (you need to be at least a half-time student to qualify for that credit).
To qualify for either credit, your income must be less than $180,000 if married filing jointly or $90,000 for single filers. The size of the credit starts to phase out for married couples earning more than $160,000 or others earning more than $80,000.
For more information, see IRS Publication 970 Tax Benefits for Education.
Bonus Credit for Savers
The retirement saver’s tax credit is one of the most frequently overlooked tax breaks, and it can be worth up to $1,000 for single filers and $2,000 for married couples filing jointly. To qualify, you must meet the income requirements and contribute to a 401(k), 403(b), traditional or Roth IRA or other retirement-savings plan.
“Most people know about the benefits of saving in a tax-deferred or tax-advantaged retirement account, but many are unaware that they could potentially get an additional tax benefit in the form of a tax credit,” says Catherine Collinson, CEO and president of nonprofit Transamerica Institute and Transamerica Center for Retirement Studies.
“The saver’s tax credit may simply sound too good to be true,” she says. In a recent survey, her organization found that less than half of U.S. workers were aware of the credit — and people with lower incomes, who were more likely to qualify for the credit, were even less likely to know about it.
To qualify for the credit, your adjusted gross income must have been less than $36,500 in 2023 as a single tax filer, $54,750 if filing as head of household and $73,000 if married filing jointly. You must be 18 or older, and no one can claim you as a dependent on their tax return.
The credit is worth 10%, 20% or 50% of up to $2,000 in retirement savings contributions for individuals or $4,000 for married couples — the lower your income, the larger the percentage. Even if you didn’t make a contribution to your 401(k) or 403(b) last year, you can still make 2023 IRA contributions until the tax-filing deadline on April 15, 2024. For more information, see the IRS Saver’s Credit fact sheet.
It can be easy to overlook this break if you’re just getting started in your career and are making your first contributions to a 401(k) at work.
“For people who aren’t yet saving, this could be just the little nudge to help them get started,” Collinson says. “Every bit can add up, especially over the long term, which is what saving for retirement is all about.”
You may also not realize you’re eligible for the break if your income was always above the cutoff in the past but you’re now semi-retired, you were unemployed for a few months or your employer reduced your work hours.
“There have been so many disruptions in employment over the last few years, more people may be eligible even if they didn’t qualify in the past,” Collinson says.
Tax-Deductible Savings for Your Side Gig
You can make tax-deductible contributions to a solo 401(k) or simplified employee pension if you’re self-employed, and you don’t need to be a full-time business owner to qualify — you can even contribute if you have some freelance income on the side.
“The solo 401(k) is helpful because it allows self-employed individuals to make a contribution of up to $22,500 in salary deferral for 2023 or $30,000 for people 50 or older, plus an employer contribution that is a percentage of their compensation,” says Patrick Carney, a certified financial planner in Lancaster, Pennsylvania.
Since self-employed people are both the employer and the employee, they get to make both parts of the contribution — with a maximum of $66,000 for 2023 ($73,500 if you’re 50 or older and making catch-up contributions).
The solo 401(k) salary deferral limits rise to $23,000 for 2024 plus $7,500 if you’re 50 or older with total contributions of $69,000 ($76,500 if you’re 50 or older making catch-up contributions).
Your contributions can’t be more than your self-employed income for the year. If, for example, you earned $5,000 from your freelance gig in 2023, you can contribute up to that amount to a solo 401(k).
Your contributions are tax-deductible and the money grows tax-deferred for retirement. The allowable contribution may be reduced, however, if you’ve also contributed to an employer’s 401(k) for the year.
Tax Breaks for Freelancers and Self-Employed Individuals
If you have self-employment income, you can deduct many of your expenses on your Schedule C, such as office equipment and supplies, furniture, advertising and mailing costs, business travel, business phone, computer, software and more.
But people often overlook other tax-deductible expenses, such as errors and omission insurance, professional licenses, continuing education, professional publications and books, Steber says. In addition, you can also deduct legal expenses and tax-preparation fees for your business.
Your health insurance premiums may also be tax deductible if you have income from self-employment and aren’t eligible to participate in a health plan offered by your or your spouse’s employer. And you can deduct Medicare premiums as self-employed health insurance premiums, says Curt Sheldon, a certified financial planner and enrolled agent in Alexandria, Virginia.
[READ: A Guide to Tax Deductions for the Self-Employed]
Home Office Deduction for Freelancers
You can’t take the home office deduction if you’re working remotely for an employer. But if you’re self-employed, or you just did a freelance side gig or consulting work for a few months, you may be able to claim it.
To qualify, you must use part of your home “regularly and exclusively” as a home office for your self-employed business. You don’t have to designate a separate room, but you can’t take the break if you occasionally use your laptop on your dining room table, for example.
If you qualify, you can either deduct a portion of your rent or mortgage interest, property taxes, homeowners insurance and utilities based on the percentage of your home you use for your home office. Or, you can use the simplified method and deduct $5 per square foot of your home office (up to 300 square feet) with a maximum deduction of $1,500.
If you were self-employed only for part of the year, you can take one-twelfth of the break for each month you worked from your home office.
Jean Wells, a CPA and associate professor at the Howard University School of Business, recommends calculating the deduction both ways to determine which method will give you more tax savings. For more information, see IRS Publication 587, Business Use of Your Home.
Tax-Deductible HSA Contributions When You Get Your Own Insurance
It’s not too late to make tax-deductible contributions to a health savings account for 2023. If you had an HSA-eligible health insurance policy with a deductible of at least $1,500 for self-only coverage or $3,000 for family coverage in 2023, you have until April 15, 2024, to make tax-advantaged contributions.
Many people automatically make pretax contributions to an HSA if they have a high-deductible plan through work, and they may also get extra money from their employer. But you can also open an HSA account and make tax-deductible contributions if you buy your own insurance.
You can contribute up to $3,850 to an HSA if you had self-only coverage in 2023 or up to $7,750 for family coverage, plus an extra $1,000 if you were 55 or older. If you had only an HSA-eligible health insurance policy for the first part of the year, you can prorate your contributions based on the number of months you had the eligible coverage.
[Read: How to Choose a Health Savings Account.]
The contribution amounts are increasing significantly for 2024. If you have an HSA-eligible health insurance policy with a deductible of at least $1,600 for self-only coverage or $3,200 for family coverage in 2024, you can contribute up to $4,150 or $8,300, respectively,, plus an extra $1,000 if you’re 55 or older.
HSAs can provide a triple tax break: Your contributions are pre-tax, the money grows tax-deferred in the account and you can use it tax-free for eligible medical expenses at any time with no expiration date.
If you buy your own insurance, contributing to an HSA has an added benefit because your tax-deductible contributions can lower your taxable income and may help you qualify for a larger premium subsidy if you buy your health insurance coverage on Healthcare.gov or your state insurance marketplace, Carney says.
Those subsidies have been expanded significantly through 2025, and many who didn’t qualify in the past can now get help with their health insurance premiums.
“Since the subsidies are largely based on income, contributing to a 401(k) or HSA is a way to reduce how much income flows through to the tax return,” Carney says.
You can estimate the size of your subsidy by using KFF’s insurance marketplace calculator, and you can get specific costs for plans in your area at Healthcare.gov or your state marketplace.
Medical-Related Travel, Long-Term Care Premiums and Other Expenses
If you itemize your deductions, you can deduct eligible medical expenses that are more than 7.5% of your adjusted gross income.
Your health insurance deductible, co-payments and other out-of-pocket medical expenses count, as do some frequently overlooked costs, such as housing and incidentals when traveling for medical reasons, contact lens supplies, breathing machines, walkers, crutches and scooters (when necessary to maintain a level of mobility), Steber says.
[Related:I Have to Pay Taxes on That?]
You can also deduct long-term care insurance premiums as an itemized medical expense based on your age, Sheldon says.
You can deduct up to $480 in eligible long-term care insurance premiums if you were 40 or younger in 2023, $890 if you were 41 to 50, $1,790 if you were 51 to 60, $4,770 if you were 61 to 70, and $5,960 if you were 70 and older.
“Some states allow the deduction, even if it is not deducted on the federal return,” Sheldon adds. For more information, see IRS Publication 502, Medical and Dental Expenses.
Energy-Related Home Improvements
Tax credits for energy efficient home improvements have been expanded significantly for tax years 2023 through 2032, Luscombe says.
The Residential Clean Energy Credit is worth up to 30% of the cost of solar, fuel cells, small wind energy, geothermal heat pumps and battery storage technology, with no total limit, Sheldon says.
The credit is not refundable, which means that the amount you receive can’t be more than the amount you owe in tax, but you can carry any excess credit forward to future years.
The Energy Efficient Home Improvement Credit now has an annual maximum rather than a lifetime limit, says Sheldon. You can receive a 30% credit up to the annual limit of $2,000 for energy efficient heat pumps, biomass stoves and boilers. This credit is nonrefundable and can’t be carried forward.
You can receive a 30% credit worth up to $1,200 per year for installing energy efficient doors, windows, insulation, central air and other eligible improvements. The cost of a home energy audit can also be eligible for the break. Note that each item also has a maximum dollar limit.
For more information about these credits, see the IRS’s factsheet.
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Update 01/26/24: This story was published at an earlier date and has been updated with new information.
