Deductions are somewhat more complicated. Many taxpayers claim the standard deduction, which varies depending on filing status, as shown in the table below.

Some taxpayers, however, may choose to itemize their deductions. This means subtracting certain eligible expenses and expenditures. Possible deductions include those for student loan interest payments, contributions to an IRA, moving expenses and health-insurance contributions for self-employed persons. The most common itemized deductions also include:

• Deduction for state and local taxes paid. Also known as the SALT deduction, it allows taxpayers to deduct up to $10,000 of any state and local property taxes plus either their state and local income taxes or sales taxes.
• Deduction for mortgage interest paid. Interest paid on the mortgages for up to two homes, and a total of $1,000,000 in debt can be subtracted. Homes purchased after Dec. 15, 2017 will have this lowered to the first $750,000 of the mortgage.
• Deduction for charitable contributions.
• Deduction for medical expenses that exceed 7.5% of AGI. (Note that the income threshold was 10% until the new tax plan changed it to 7.5%.)

Keep in mind that most taxpayers don’t itemize their deductions. If the standard deduction is larger than the sum of your itemized deductions (as it is for many taxpayers), you receive the standard deduction.

Once you have subtracted deductions from your adjusted gross income, you have your taxable income. If your taxable income is zero, that means you do not owe any income tax.