Itemized Deductions
Itemized deductions are specific expenses taxpayers can deduct from adjusted gross income instead of the standard deduction, including state and local taxes, mortgage interest, charitable contributions, and certain medical expenses.
Exam Tip
SALT cap increased to $40,000 for 2025-2029 under OBBBA. Mortgage interest limited to $750,000. Medical only above 7.5% AGI.
What Are Itemized Deductions?
Itemized deductions allow taxpayers to subtract specific qualifying expenses from their AGI. You itemize when total qualifying expenses exceed the standard deduction.
Major Categories (2025)
| Category | Limits |
|---|---|
| SALT | $40,000 cap ($20,000 MFS) |
| Mortgage Interest | Loans up to $750,000 |
| Charitable Contributions | Up to 60% of AGI (cash) |
| Medical Expenses | Exceeding 7.5% of AGI |
2025 SALT Changes (OBBBA)
| Provision | 2025-2029 Rule |
|---|---|
| Cap Amount | $40,000 (was $10,000) |
| Income Phase-out | Begins at $500,000 MAGI |
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