What is Itemized deductions?

Itemized deductions are specific expenses—like mortgage interest, state taxes, and charitable donations—that reduce your taxable income. Governed by Schedule A of Form 1040, itemized deductions cover expenses such as state and local taxes (SALT) up to statutory limits, home mortgage interest, charitable contributions, and qualified medical expenses that exceed a percentage of AGI. Taxpayers choose to itemize when their total qualifying expenses exceed the standard deduction.

Under current tax rules, the SALT deduction is capped at $10,000 ($5,000 if married filing separately). Mortgage interest is deductible on acquisition debt up to $750,000 for primary and secondary residences. Medical expenses are deductible only to the extent they exceed 7.5% of the taxpayer's AGI.

Itemizing requires keeping detailed receipts and documentation to justify each deduction in the event of an IRS audit. It is more common among homeowners, individuals with high state tax burdens, and major charitable donors.