13 Outrageous Tax Loopholes
The U.S. tax code contains many overly specific deductions that can seem downright ridiculous. While complex tax loopholes allow large corporations and wealthy individuals to significantly reduce their tax bills, there are lesser-known provisions that benefit average taxpayers as well.
Before you file in the next few months, comb through these overlooked and obscure breaks. While the loopholes benefiting large corporations and the ultra-wealthy should be scrutinized, average taxpayers can also find ridiculous -- yet legal -- ways to reduce their tax bill.
1. 15 Days of Free Rental Income
The IRS allows you to rent out your home for up to 15 days without having to pay taxes on the income you earn from that rental. This might not sound like much for the average house, but some homes that are located near annual events, like the Masters Golf Tournament or big college football games, can earn a big chunk of change during those big weeks.
It doesn’t matter how much you charge to rent your home — you won’t pay taxes on that money, as long as it’s for 15 days or fewer.
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2. Breast Augmentation Equals Tax Reduction
The IRS has indicated that breast implants are considered cosmetic surgery and, as such, do not qualify as a medical expense for tax purposes. But Chesty Love, a stripper and exotic dancer, argued that her size 56N breast implants were required for her employment and “unsuitable for everyday use,” which qualified them for a tax deduction.
3. Cat Food Deduction
The cost of food for the family pet is not tax deductible, but if the pet food is a business expense, it could be.
If a junkyard owner put out cat food to attract feral cats to their property so they would hunt the rats and snakes the business attracted, the expense would be deductible because the cats would be there exclusively for the benefit of the business.
4. Viva Las Vegas Tax Deduction
If you win money on a gambling trip, you can deduct any losses from the same trip before you calculate the taxes on your winnings. You can only deduct losses up to the amount of your winnings, and you will have to itemize. You’ll have to keep records of how much you won and lost and where your gambling took place.
On your 2025 return, you can also deduct reasonable expenses that you incurred to get that big win at the craps table. Reasonable expenses can include things like travel to the casino or racetrack.
5. Deductions for Deadbeats
If you loaned someone money and they never paid it back, you might be able to deduct it from your taxes. The deduction was intended for businesses, but the loophole allows anyone to deduct a bad debt, even if the loan was made to a friend or family member.
The loan must be considered 100% worthless, and it must be a debt, not a gift. This means that you must have come to an understanding, preferably in writing, that the money would be paid back. It also means that there has to be no chance that you’ll ever get the money back. Often, this means the person who borrowed the money has declared bankruptcy or that you have called, sent letters and made demands for repayment.
6. Qualify by Having a Kidnapped Child
This is a tax loophole no one wants to take, but it is there nonetheless. The IRS says that if your child has been kidnapped, they can still be named as a dependent child and are eligible for the deductions associated with that, such as for the Earned Income Tax Credit.
7. New Mexico’s Centenarian Deduction
This is a tax loophole for the poor or the rich. When you are about to turn 100 years old, you might want to move to New Mexico. Those who have reached the century mark do not have to pay personal income taxes in the Land of Enchantment.
You’ll still need to be pretty self-sufficient, though — you can’t claim the break if you’re a dependent on someone else’s tax return.
8. Personal Pool Deduction
Install a pool for medical reasons and you could take a big tax break. A taxpayer who suffered from emphysema and bronchitis was prescribed a swimming regimen by his doctor as part of his treatment. He built a pool and was able to write off the cost, less the amount that his home increased in value due to the pool. He could also write off the costs of pool upkeep.
9. Clarinet Lesson Deduction
Individuals who itemize their medical and dental expenses might be able to write off their child’s musical instrument lessons. In 1962, the IRS ruled that a taxpayer could deduct their child’s clarinet lessons as a medical expense because the lessons were prescribed by an orthodontist as a way to treat the child’s congenital defect.
10. Hawaii’s Exceptional Tree Deduction
The state of Hawaii encourages its inhabitants to grow and take care of “exceptional trees” — trees that meet a number of criteria including cultural value, rarity and aesthetic quality. If you maintain an exceptional tree, you can claim an individual tax deduction of up to $3,000 per tree once every three years.
11. Florida’s Cow Deduction
Florida’s Greenbelt law allows property owners who use their land for agricultural purposes to pay taxes on the land based on its use value rather than its market value — and the use value is typically lower.
Some developers take advantage of this tax law by temporarily converting their land into agricultural space by renting cows to keep on the land during the time of its assessment, The Atlantic reported.
12. South Carolina’s Charitable Deer Meat Deduction
Individuals who donate deer meat to charity qualify for a tax credit under South Carolina law. To qualify for the credit, you must have a license to operate as a meatpacker, butcher or processing plant, and donate part of a contract with a nonprofit that distributes food to the needy.
If any portion of the prepared deer meat you donated was used for a commercial enterprise, you won’t qualify for the credit.
13. Performing Artist Tax Break
Qualified performing artists can deduct performing arts-related business expenses even if they don’t itemize deductions.
To be deemed a qualified performing artist, you must have performed for at least two employers during the tax year, received wages of $200 or more from each employer and had allowable income expenses attributable to the performing arts of more than 10% of your gross income from performing and had an adjusted gross income of $16,000 or less before deducting expenses.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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