Itemized Deductions Explained: A Practical List, Limits, and When to Itemize

Choosing to itemize your deductions can be one of the most important tax decisions you make each year. Itemized deductions reduce taxable income by subtracting qualifying expenses from your adjusted gross income (AGI). But which expenses qualify, what limits apply, and how do you decide whether to itemize or take the standard deduction? This guide breaks down the most common itemized deductions, documentation rules, limits and phaseouts, planning moves like bunching, and audit risks—so you can make a confident, tax-smart choice.

What qualifies as an itemized deduction?

Itemized deductions are specific expenses allowed by the tax code that you claim on Schedule A of Form 1040 instead of taking the standard deduction. Key categories include medical expenses (above a threshold), state and local taxes (SALT), mortgage interest, charitable contributions, casualty and theft losses (with restrictions), and certain investment-related deductions. Many miscellaneous deductions that used to be available were suspended by the 2017 Tax Cuts and Jobs Act (TCJA) through 2025, so it’s important to know what remains deductible today.

Medical and dental expenses

Only the portion of medical and dental expenses that exceeds 7.5% of your AGI is deductible. That includes unreimbursed payments for diagnosis, treatment, dental work, prescription drugs, and qualified long‑term care premiums (subject to limits). Eligible expenses must be paid in the tax year claimed. Keep receipts, Explanation of Benefits (EOBs), and statements from providers to substantiate claims.

State and local taxes (SALT)

SALT includes state and local income taxes (or state sales tax, if you choose), plus property taxes. The deduction is capped at $10,000 per return ($5,000 for married filing separately). That cap has significant implications for taxpayers in high-tax states and is a primary reason many taxpayers with large property tax bills no longer find itemizing advantageous.

Home mortgage interest

Interest on acquisition debt secured by your primary or secondary residence is generally deductible on mortgage balances up to $750,000 for mortgages originated after December 15, 2017 ($1 million limit for older mortgages). Interest on home equity loans is deductible only if the proceeds were used to buy, build, or substantially improve the home that secures the loan. Lenders provide Form 1098 showing interest paid; keep mortgage statements and closing documents.

Charitable contributions

Gifts to qualified charities are deductible, but limits depend on the asset type and the charity. Cash donations to public charities are generally deductible up to 60% of AGI (lower limits for contributions to certain organizations or gifts of appreciated property). For any single donation of $250 or more, you need a contemporaneous written acknowledgment from the charity. Non‑cash donations require detailed records and, in many cases, a Form 8283 filing; large non‑cash gifts may require professional appraisal.

Casualty, theft, and disaster losses

Since the TCJA, personal casualty and theft losses are deductible only if they’re attributable to a federally declared disaster. The deductible amount is subject to a $100 per‑event floor and an overall 10% of AGI threshold, with additional special rules for disaster relief. Keep police reports, insurance claims, repair estimates, and FEMA documentation.

Gambling losses and other limited deductions

Gambling losses are deductible up to the extent of gambling winnings and must be itemized. You should keep W‑2G forms, wagering records, and receipts that show wins and losses. Certain investment interest expenses may be deductible up to net investment income; these require Form 4952 and careful calculation.

Documentation and substantiation: what the IRS expects

Proper documentation is critical when itemizing. The IRS expects you to be able to prove your claims if audited.

Receipts, bank records, and acknowledgments

Maintain receipts, canceled checks, bank statements, and credit‑card records that clearly identify payee, date, and amount. For charitable gifts under $250, a bank record or receipt showing the charity’s name and the amount is generally sufficient; for gifts of $250 or more, you must have a written acknowledgment from the charity describing the donation and whether you received any goods or services in return.

Non‑cash donation rules

Non‑cash donations require a description of items donated, condition, fair market value, and supporting documentation. If the total of non‑cash contributions for the year exceeds $500, you must file Form 8283. Donations over certain thresholds (e.g., $5,000 for art or collections) generally require a qualified appraisal.

How long to keep records

Keep tax records at least three years from the date you filed, since this is the typical statute of limitations for most audits. Keep records for seven years if you file a claim for a loss from worthless securities or bad debt, and keep records longer if you underreport income by more than 25% or don’t file a return. For property, keep documents supporting basis until the period of limitations expires on the return on which you claim the related deduction.

Should you itemize? Practical decision rules

To decide whether to itemize, compare the total of your allowable Schedule A deductions to your standard deduction. Use these practical decision rules:

• If your total itemized deductions exceed the standard deduction for your filing status, itemize.
• If you’re close, consider bunching—prepaying charitable gifts or deductible expenses so two years’ worth of deductions fall in one tax year.
• Factor in state tax returns—some states allow itemized deductions or have different rules that affect your overall tax position.

Example

Imagine a married couple filing jointly with $12,000 in SALT (capped at $10,000), $8,000 mortgage interest, $3,000 charitable gifts, and $5,000 unreimbursed medical expenses on an AGI of $100,000. Their deductible medical amount is $5,000 (medical minus 7.5% of AGI = $7,500 threshold), so $5,000 of the $12,000 paid is not deductible. Total itemized deductions would be roughly: SALT $10,000 + mortgage interest $8,000 + charitable $3,000 + medical $2,500 (the portion exceeding the threshold) = $23,500. Compare that to the standard deduction for MFJ for the tax year in question to decide whether to itemize.

Planning tools: bunching, timing, and MAGI considerations

Bunching accelerates deductible expenses into a single tax year to exceed the standard deduction. Charitable bunching is common—donate two years’ worth of giving to a donor‑advised fund or make larger gifts in alternating years. Prepaying property taxes or paying year‑end medical expenses and prescriptions can also help, but watch deduction limits and look at state tax consequences.

Be aware of MAGI-based phaseouts when planning: certain deductions and credits phase out at higher income levels, so a strategy that reduces AGI or MAGI (for example, above‑the‑line retirement contributions) can preserve itemized deduction benefits or maintain eligibility for credits.

Common pitfalls and IRS audit triggers

Certain itemized deduction patterns draw IRS scrutiny: unusually large charitable deductions without proper acknowledgments, repeatedly claiming the same high casualty losses, itemizing while reporting very low income, or inflating non‑cash donation values. Keep contemporaneous records and avoid round numbers that suggest estimation. If you claim a deduction that requires an appraisal, get a qualified appraisal and retain documentation.

What changed after TCJA

The TCJA raised the standard deduction substantially and suspended many miscellaneous itemized deductions (such as unreimbursed employee expenses, tax preparation fees, and investment advisory fees) through 2025. That means fewer taxpayers benefit from itemizing, and planning (like bunching) has become more important for those who still can.

Understanding the itemized deductions you qualify for, their documentation rules, and how they interact with limits like the SALT cap and mortgage interest ceilings can yield meaningful tax savings. Evaluate your expected deductible expenses each year, consider timing and bunching strategies, and preserve substantiating documents so you can support claims if audited. When in doubt, consult a tax professional who can model your return with itemized versus standard options and incorporate phaseouts, AMT risk, and state tax considerations to identify the approach that produces the lowest overall tax burden.