Itemized deductions replace the standard deduction when the total of qualifying expenses exceeds the standard deduction amount. For 2026 that threshold is $32,200 for married filing jointly, $24,150 for head of household, and $16,100 for single filers. Because the TCJA nearly doubled the standard deduction and capped SALT deductions at $10,000, fewer than 10% of taxpayers now itemize - down from roughly 30% before TCJA. For those who do itemize, the major categories are state and local taxes (capped), mortgage interest, charitable contributions, and medical expenses.
State and local taxes (SALT) - expanded to $40,000 (2025-2029): The combined deduction for state income taxes (or sales taxes), real property taxes, and personal property taxes is expanded to $40,000 for 2025 and $40,400 for 2026 per return ($20,000 and $20,200 MFS), increasing 1% per year through 2029 and reduced for MAGI above $500,000 for 2025 ($505,000 for 2026; half for MFS). The cap applies regardless of actual taxes paid. This expansion is temporary and reverts to $10,000 ($5,000 MFS) in 2030 by statute.
Mortgage interest - $750,000 acquisition debt: Interest on up to $750,000 of debt used to acquire, build, or substantially improve a qualified residence (primary or secondary home). Debt incurred on or before December 15, 2017 is grandfathered at the prior $1 million limit. Home equity loan interest is deductible only if the proceeds were used for acquisition or improvement.
Charitable contributions: Cash gifts to public charities up to 60% of AGI; appreciated property (stock, real estate) up to 30% of AGI; excess carries forward five years. For taxable years beginning after 2025, itemized charitable contributions are allowed only to the extent they exceed 0.5% of the contribution base (generally AGI) (IRC §170(b)(1)(I)), and total itemized deductions are reduced by 2/37 of the lesser of the itemized deductions or the taxable income above the start of the 37% bracket (IRC §68).
Medical expenses: Unreimbursed medical expenses exceeding 7.5% of AGI. Only the excess above the 7.5% floor is deductible.
The TCJA suspended the 2% AGI floor miscellaneous itemized deductions (unreimbursed employee business expenses, investment advisory fees, tax preparation fees) through 2025. OBBBA extended this suspension permanently - these deductions are no longer available for employees. Self-employed taxpayers can still deduct business expenses on Schedule C. W-2 employees cannot deduct home office, tools, uniforms, or other unreimbursed job costs through itemized deductions.
For taxpayers whose itemized deductions hover near the standard deduction threshold, bunching concentrates deductible expenses into alternating years. Prepay next year's property taxes in December, make two years of charitable contributions in one year (or use a donor-advised fund), schedule elective medical procedures to cluster in the same year. In the bunched year, itemize; in the off year, take the standard deduction. This strategy extracts tax benefit from deductions that would otherwise produce no benefit by spreading them evenly across years.