What Is a Tax Deduction?

A tax deduction is one of the most effective ways to lower your taxable income—and, in turn, reduce your overall tax bill. Whether you’re a wage earner, freelancer, or small business owner, understanding what qualifies as a deduction can save you money and help you avoid paying more than necessary.

At Walker Tax Relief, we guide clients through the maze of deductions, making sure you get credit for every dollar you’re entitled to. Here’s a breakdown of how tax deductions work, and why they matter.

How Tax Deductions Work
Tax deductions reduce the amount of your income that is subject to federal (and often state) income tax. The more deductions you qualify for, the lower your taxable income, and the less tax you may owe.

Two Main Types of Tax Deductions
✅ 1. Above-the-Line Deductions
These deductions are available to everyone—whether you itemize or take the standard deduction. They reduce your adjusted gross income (AGI) and may include:

IRA contributions
Student loan interest
Self-employed business expenses
Health savings account (HSA) contributions

Above-the-line deductions often help you qualify for additional tax credits by lowering your AGI.

✅ 2. Itemized Deductions
You can choose to itemize if your eligible deductions are greater than the standard deduction amount for your filing status. Common itemized deductions include:

State and local income taxes
Mortgage interest
Charitable contributions
Medical expenses (if they exceed a percentage of your income)
Certain job-related and tax preparation expenses

The decision to itemize vs. take the standard deduction depends on your personal finances. Jennifer Walker can help you run the numbers to see which option saves you more.

Things to Know About Deductions
Some deductions phase out or become limited at higher income levels.

You must keep records (receipts, mileage logs, donation letters, etc.) to back up your claims.

Certain deductions are not available if you take the standard deduction.

Why Work with a Tax Pro?
Knowing which deductions you qualify for can get complicated—especially if you’re self-employed or own a small business. That’s where Walker Tax Relief comes in. With decades of experience, Jennifer Walker, an Enrolled Agent in Northville, MI, helps clients across the U.S. reduce their tax burden legally and effectively.

Serving Northville, Michigan and beyond
Need help with deductions? Contact Jennifer Walker and let us help you keep more of your hard-earned income.