Itemized Deductions

Itemizing means listing specific deductible expenses on Schedule A of Form 1040 instead of taking the flat standard deduction. You get whichever is larger, never both, and you decide again every year. The items come off after your adjusted gross income (AGI) is set, so they lower taxable income but not AGI itself.

That order matters. Medicare’s IRMAA surcharges, the taxable share of Social Security and several other income tests read AGI or modified AGI, so a large itemized deduction cuts your income tax while leaving those tests untouched. A qualified charitable distribution, by contrast, keeps a gift out of AGI altogether.

Itemizing also doesn’t cost you the deductions that sit outside Schedule A. The senior deduction and the deductions for tips, overtime and car-loan interest, all claimed on Schedule 1-A, apply either way, as does the section 199A business deduction. The one exception is the new charitable deduction of up to $1,000 ($2,000 joint) for cash gifts, which only standard-deduction filers can take.

Every Schedule A category has its own gate, so the amount you can deduct is usually well below what you spent. Medical and dental costs count only above 7.5% of AGI, which screens out most years except those with a hospital stay or long-term care. State and local taxes stop at the SALT cap of $40,400 for 2026, less for incomes above $505,000. Mortgage interest is deductible on up to $750,000 of acquisition debt, or $1 million for loans taken out before December 16, 2017. Charitable gifts lose the first 0.5% of AGI starting in 2026, and cash gifts to public charities are capped at 60% of AGI, with any excess carried forward for five years.

A final haircut arrives at the top. From 2026, section 68 cuts itemized deductions by 2/37 of the smaller of your deductions or the amount by which your taxable income, with those deductions added back, exceeds where the 37% bracket begins ($640,600 single, $768,700 joint). Each dollar deducted then saves at most 35 cents instead of 37. A couple deep in the top bracket with $50,000 of itemized deductions keeps $47,297 of them, worth $17,500 in tax.

The alternative minimum tax adds one more check: it disallows the state and local tax deduction entirely, though for 2026 its exemption begins to phase out only above $1,000,000 of alternative minimum taxable income for joint filers ($500,000 single).

Several familiar write-offs are gone for good. The Tax Cuts and Jobs Act suspended miscellaneous itemized deductions subject to the 2% floor from 2018, and the One Big Beautiful Bill Act made that permanent, so unreimbursed job expenses and tax-preparation fees stay nondeductible. Interest on a home-equity loan or HELOC counts only when the money bought, built or substantially improved the home securing it. Personal casualty and theft losses generally count only when tied to a declared disaster.

A few rules changed or came back for 2026:

Itemizing tends to win for households carrying several large items at once: high state income and property taxes, a big mortgage in its early years, and regular giving. It tends to lose for retirees who have paid off the house and live in a low-tax state, even when they give generously. Because the choice resets every year, the gap between your itemized total and the standard deduction is worth watching. When it is small, a few moves can tip the balance: