Itemized deductions replace the standard deduction when the total of qualifying expenses exceeds the standard deduction amount. For 2026 that threshold is $30,000 for married filing jointly, $22,500 for head of household, and $15,000 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 (2025-2029) per return ($5,000 MFS). The cap applies regardless of actual taxes paid. This expansion is temporary and reverts to $10,000 in 2030 or increased as some proposals suggested.
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 taken out 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.
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.