Itemized Deduction
Specific expenses you can deduct instead of taking the standard deduction, including mortgage interest, state/local taxes (SALT cap: $40,000 for 2025+ under OBBBA, phased out for high earners), charitable donations, and medical expenses.
Itemized deductions are individual expenses the IRS allows you to subtract from your AGI when they total more than the standard deduction. You list them on Schedule A of Form 1040. Major categories include state and local taxes (SALT), mortgage interest, charitable contributions, and unreimbursed medical expenses exceeding 7.5% of AGI.
The SALT deduction covers state income or sales tax plus property taxes. Pre-OBBBA (2018–2024) it was capped at $10,000 ($5,000 MFS). Under OBBBA (2025+) the cap is $40,000 ($20,000 MFS), phasing out $1-for-$1 for MAGI above $500,000 ($250,000 MFS) and reverting toward a $10,000 ($5,000 MFS) floor. Mortgage interest is deductible on loan balances up to $750,000 for mortgages originated after December 15, 2017.
You should compare your total itemized deductions to your standard deduction each year. If you are close to the breakpoint, strategies like bunching charitable donations into alternating years can help you itemize in one year and take the standard deduction in the other, maximizing your overall tax savings.
Related Terms
Standard Deduction
A fixed dollar amount that reduces your taxable income, available to all filers who do not itemize. For 2025, it is $15,750 for single filers and $31,500 for married filing jointly (OBBBA-adjusted).
SALT Deduction
An itemized deduction for state and local taxes paid, including income tax (or sales tax) and property tax. Under OBBBA (2025+), capped at $40,000 per return ($20,000 MFS) with phaseout above $500,000 MAGI to a $10,000 floor. Pre-OBBBA (2018–2024) the cap was $10,000 flat.
Mortgage Interest Deduction
An itemized deduction for interest paid on mortgage debt up to $750,000 ($375,000 if married filing separately) used to buy, build, or improve your primary or second home.
Charitable Deduction
An itemized deduction for donations to qualified charitable organizations. Cash donations are generally deductible up to 60% of AGI; appreciated property donations up to 30%.