20 Local Tax Deductions You Might Be Missing
Many people don't know about local tax deductions that can help them lower their taxable income and maybe even get a bigger refund. These deductions can differ in each city and state, and if you don't take advantage of them, you might pay too much in taxes.
- Tricia Quitales
- 7 min read
People who owe taxes often forget about local tax deductions, but they can have a big effect on how much they owe. Different places offer different deductions, and many people may not be fully utilizing them. Local tax deductions, like property tax relief and credits for certain costs, can lower taxable income and raise the chance of getting a refund. This article lists 20 local tax breaks that might help you save money and make sure you’re not missing out on any money.
1. Property Tax Deductions
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Many cities and counties let homeowners get property tax breaks, especially seniors, veterans, and low-income people. These tax breaks can cut the amount of property taxes you have to pay every year by a large amount. Check with your local tax office to see if any programs can help you pay less on your property taxes.
2. Homestead Exemption
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In some places, homeowners can get a homestead exemption that lowers the amount of tax their property is taxed on. This exemption can help you pay less in property taxes, which could save you a lot of money. Each state and local government has its own eligibility rules, so check to see if you meet them.
3. Local Charitable Contributions
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Some local governments allow people to deduct donations they make to certain types of charities. These deductions can lower the amount of income that is taxed, and sometimes, local governments will give you extra credits for giving to charity. Giving to local nonprofits might help your taxes and the organization, too.
4. Energy-Efficient Home Improvements
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Many local governments let people who make improvements to their homes that make them more energy-efficient get tax breaks. These deductions usually cover improvements like adding insulation, solar panels, or energy-efficient windows. These local tax breaks can help you save money on your property taxes and energy bills.
5. Childcare Tax Deductions
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There are places where taxpayers can write off the cost of childcare, like daycare or after-school programs. Most of the time, these deductions are meant to help parents who work save money. Keep track of your childcare costs to get the most out of your tax break if you live in a place that lets you.
6. Veterans’ Property Tax Benefits
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Military veterans can get property tax breaks or exemptions in many cities and counties. These benefits may be different for each veteran based on their level of disability or income. If you are a veteran, check with your local tax office to see if you can get a discount on your property taxes.
7. State and Local Sales Tax Deduction
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You can deduct sales tax payments from your income taxes in some states and cities. This deduction could lower your overall tax bill if you bought big things during the year, like a new car or home improvements. You might need to keep track of what you buy to get the most out of this benefit.
8. Business Expense Deductions
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Self-employed people or those who own a business in certain areas can deduct local business costs from their taxable income. Costs for office supplies, equipment, or vehicles may be eligible for these deductions. Talk to the tax office in your area to find out what business-related deductions you can get.
9. Renters’ Tax Credits
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Renters can get tax breaks from some local governments based on how much they pay in rent. Renters with low incomes can often get these credits, which can help bring down the cost of living overall. People who rent should find out if their area has any rent-related tax relief programs that they can use.
10. Local Tax Credit for Higher Education Expenses
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Some cities and states let people get local tax credits to help pay for tuition, books, and other fees for college. These credits can lower your local tax bill, which is especially helpful for students or parents paying for school-related costs. Find out if any local tax credits for education may apply.
11. Senior Citizens’ Property Tax Discounts
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Many local governments give discounts or exemptions on property taxes to seniors. This can help older homeowners pay less in taxes overall. These programs often have age or income limits, so check with your local tax office to ensure you qualify. Seniors who qualify can get a big break on their property taxes if they use these deductions.
12. Local Tax Credit for Green Energy Systems
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People who put in renewable energy systems like geothermal heating or wind turbines may be able to get tax breaks or credits in their local area. Many cities and states encourage people to use clean energy by giving homeowners tax breaks. Find out from your local government if there are any tax breaks for green energy systems in your area.
13. Local Income Tax Deductions for Commuting Expenses
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For some local governments, people can deduct commuting costs, like public transportation or parking, from their local income taxes. This kind of tax break can add up over time if you live in a city that has it. To get the most out of this benefit, keep track of how much your commute costs throughout the year.
14. Local Tax Benefits for Health-Related Expenses
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In some areas, people can deduct costs related to their health, like going to the doctor, getting medical care, and prescription drugs. You can lower your taxable income and get some help with medical costs by taking these deductions. Talk to your local tax office to determine what health-related costs you can deduct.
15. State-Local Tax Deduction for Mortgage Interest
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Some states and local governments let people deduct mortgage interest payments, which can lower the amount of money that is taxed. This deduction can help you pay less in state and local taxes when you pay off your mortgage. If you want to get this benefit, make sure you report your mortgage interest payments correctly.
16. Local Tax Relief for Disaster Victims
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Some cities and towns offer tax relief programs to people who live in areas hit by natural disasters. Some of these programs may let you deduct costs for home repairs, property damage, and other related costs. If your property has been damaged, find out if you can get any local disaster relief tax breaks.
17. Local Tax Deduction for Donations to Local Schools
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In some places, you can get a tax break or credit for giving money to schools or educational programs in your area. These tax breaks can get people involved in their communities and help public schools. For those who can give to their local schools, you might be able to get a tax break.
18. Local Tax Deductions for Charitable Miles Driven
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You can actually deduct the gas you use to get to charity events or activities in some places. This can include driving to do volunteer work or giving money. To get this deduction, keep track of your mileage and send in the necessary paperwork.
19. Local Tax Credit for First-Time Homebuyers
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People who are buying their first home may be able to get local tax credits or deductions that can help them pay for the house. Most of the time, these credits can be used for closing costs, mortgage interest, and other costs related to buying a home. Before you buy a home for the first time, check with your local tax office to see if any credits like this are available.
20. Local Tax Benefits for Farm Property
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In some areas, farmers and people who work in agriculture may be able to get tax breaks or exemptions on farm property. Local property taxes can go down with these deductions, which saves farm owners money. If you own farmland, you should check with your local tax office because they may have different rules for agricultural land.