Itemized Deductions Explained: What You Can Deduct & When It Makes Sense
Introduction
When tax season arrives, one of the most important choices taxpayers face is whether to claim the standard deduction or itemize deductions. The decision can have a big impact on your tax bill. While the standard deduction offers simplicity, itemizing may unlock greater savings if you have significant deductible expenses.
This article explains how itemized deductions work, what qualifies, and how to decide whether itemizing is right for you.
What Are Itemized Deductions?
An itemized deduction is an eligible expense that the IRS allows you to subtract from your taxable income. Instead of claiming the flat standard deduction, you total these expenses on Schedule A of Form 1040 and reduce your taxable income accordingly.
Who Typically Benefits from Itemizing?
Itemizing may be worthwhile if you:
Own a home with a mortgage and pay substantial interest or property taxes
Live in a state with high income or property taxes
Had large out-of-pocket medical or dental bills during the year
Donate consistently or in large amounts to qualified charities
Experienced a loss in a federally declared disaster area
Common Itemized Deductions
Here are the major deductions available under IRS rules:
Medical and Dental Expenses
Out-of-pocket costs that exceed 7.5% of your adjusted gross income (AGI) may be deductible. This includes doctor visits, prescriptions, surgeries, and medical equipment.
State and Local Taxes (SALT)
You can deduct state and local income, sales, and property taxes, but the deduction is capped at $10,000 per return ($5,000 if married filing separately).
Mortgage Interest
Interest paid on a home mortgage (up to $750,000 of debt for loans issued after December 15, 2017) is deductible, as is interest on certain home equity loans if used for improvements.
Charitable Contributions
Cash and property donations to qualified charities may be deducted, provided you keep records or receipts. Higher-value gifts may require an appraisal.
Casualty and Theft Losses
Losses from federally declared disasters may be deductible. Other personal casualty or theft losses generally do not qualify.
Other Limited Deductions
Some older miscellaneous deductions were suspended, but specific expenses—such as gambling losses up to winnings—are still deductible.
Itemized Deductions vs. Standard Deduction
The standard deduction is a fixed amount you can subtract from taxable income without listing expenses.
Standard Deduction Amounts for 2025
Single or Married Filing Separately: $14,600
Head of Household: $21,900
Married Filing Jointly: $29,200
Deciding Which to Take
If your deductible expenses exceed your standard deduction amount, itemizing usually makes sense.
If not, the standard deduction is simpler and may save more.
Example: A single filer with $9,000 in state taxes and $6,000 in charitable donations could itemize ($15,000 total) since it’s more than the $14,600 standard deduction.
How to Itemize Deductions
Collect Records: Keep receipts, medical bills, tax statements, and donation acknowledgments.
Fill Out Schedule A: Enter expenses in the correct categories.
Submit with Form 1040: Attach Schedule A when filing your tax return.
Helpful Tips
Use software or a tax professional to compare both options.
Track deductible expenses throughout the year instead of rushing at tax time.
Double-check contribution limits for charities and mortgage interest rules.
Limitations and Pitfalls
Even if you itemize, there are rules to keep in mind:
SALT Cap: Maximum of $10,000 for state and local taxes.
Medical Floor: Only expenses above 7.5% of AGI count.
High-Income Phaseouts: While some limits were removed, certain deductions may not apply equally to all taxpayers.
When to Seek Professional Advice
Itemizing can get complex if you:
Own multiple properties
Pay taxes in more than one state
Have large charitable contributions or casualty losses
Want to ensure your deductions are audit-proof
Maximize your tax savings with confidence—contact Dimov Associates today for expert guidance on itemized deductions and personalized tax strategies.
FAQs
What expenses are deductible on Schedule A?
Should I itemize or take the standard deduction?
Can I deduct home improvements?
Do vision and dental expenses qualify?
How does itemizing work for married couples filing separately?
