The best tax deduction is a business expense that you would have purchased with or without the deduction. Business expenses don't even show up on the total income line of your taxes. The next best deductions are above the line deductions such as self-employed health insurance, HSA contributions, and self-employed retirement account contributions. The “line” is Line 38 on Form 1040, or the bottom of the first page. You can still take the standard deduction in addition to these and they aren't phased out as you income climbs. Finally, below the line deductions such as state income taxes, charitable contributions, health care expenses, mortgage interest, and property taxes are the worst types of deductions. Not only must you spend more than you get back as a deduction, but you don't get the full value of the deductions due to the standard deduction on the low end of the income range and the Pease phaseouts on the upper end.
