Itemized Deduction
Specific expenses you can deduct instead of taking the standard deduction, including mortgage interest, state/local taxes (up to $10,000), 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 is capped at $10,000 ($5,000 for married filing separately) under current law, which includes state income or sales tax plus property taxes. 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 $15,000 for single filers and $30,000 for married filing jointly.
SALT Deduction
An itemized deduction for state and local taxes paid, including income tax (or sales tax) and property tax. Currently capped at $10,000 per return ($5,000 for married filing separately).
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%.
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