Itemized Deduction
Quick Definition
Individual tax-deductible expenses that can be listed separately instead of taking the standard deduction.
Key Takeaways
- Only itemize when total deductions exceed the standard deduction amount
- SALT deduction is capped at $10,000 for federal returns
- Charitable contribution bunching is a strategy to maximize itemization benefits
- About 90% of taxpayers now take the standard deduction instead of itemizing
What Is Itemized Deduction?
Itemized deductions are specific expenses that taxpayers can individually list on Schedule A of their federal tax return to reduce taxable income, as an alternative to claiming the standard deduction. Common itemizable expenses include state and local taxes (SALT, capped at $10,000), mortgage interest, charitable contributions, and medical expenses exceeding 7.5% of adjusted gross income. Taxpayers should itemize when their total qualifying expenses exceed the standard deduction ($15,700 for single filers, $31,400 for married filing jointly in 2026). Since the Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction, fewer taxpayers benefit from itemizing — approximately 10% now itemize compared to about 30% before the law change.
Itemized Deduction Example
- 1A homeowner with $18,000 in mortgage interest, $10,000 in SALT, and $5,000 in charitable giving totals $33,000 in itemized deductions — exceeding the $31,400 standard deduction.
- 2A taxpayer with $50,000 in medical bills on $200,000 income can deduct $35,000 (amount exceeding 7.5% of AGI) when itemizing.
- 3Bunching two years of charitable donations into one year pushes itemized deductions above the standard deduction threshold.
Related Terms
Standard Deduction
A fixed dollar amount that reduces taxable income for taxpayers who do not itemize deductions.
Tax Bracket
An income range taxed at a specific rate within the progressive federal income tax system.
Marginal Tax Rate
The tax rate applied to the last dollar of income earned, determined by the taxpayer's tax bracket.
Tax Credit
A dollar-for-dollar reduction in the amount of tax owed, more valuable than an equivalent tax deduction.
FAFSA (Free Application for Federal Student Aid)
The federal form used to determine eligibility for financial aid including grants, loans, and work-study programs.
401(k)
An employer-sponsored retirement savings plan with tax advantages, often including employer matching contributions.
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