When Can You Itemize Deductions on Your Taxes?

When preparing a tax return, filers choose between taking the standard deduction or itemizing deductions. The standard deduction is a fixed amount that reduces your income. Itemizing involves compiling a list of specific deductible expenses, which may result in a lower tax liability if these expenses exceed the standard deduction amount.

The Standard Deduction Threshold

The primary factor in deciding whether to itemize is a direct comparison between your total itemized deductions and the standard deduction for your filing status. If your itemized total is higher, itemizing will result in a lower tax bill. The standard deduction is a specific dollar amount subtracted from your adjusted gross income (AGI) and is adjusted annually for inflation.

For the 2025 tax year, the standard deduction for a single individual or someone who is married filing separately is $15,150. For those filing as head of household, the amount increases to $22,750. Married couples filing a joint return and qualifying surviving spouses receive the largest standard deduction at $30,300.

The tax code provides for higher standard deduction amounts for taxpayers who are age 65 or older, or who are blind. For 2025, a single or head of household filer receives an additional $2,000 for being either 65 or older or blind. A married filer can add an extra $1,600 for each applicable condition.

Identifying Potential Itemized Deductions

If itemizing seems beneficial, the next step is to identify all your eligible expenses. These deductions fall into several distinct categories, each with its own set of rules and limitations.

Medical and Dental Expenses

Taxpayers can deduct certain medical and dental costs for themselves, their spouse, and their dependents. Qualifying expenses include payments for doctors, dentists, and other medical practitioners, as well as the costs of hospital care, prescription drugs, and medically necessary equipment. Premiums paid for health insurance are also included, unless they are paid with pre-tax dollars. You can only deduct the amount of these expenses that exceeds 7.5% of your AGI.

State and Local Taxes (SALT)

This deduction includes state and local income taxes or, alternatively, general sales taxes; you must choose which one provides a greater benefit. The deduction also covers state and local real estate taxes and personal property taxes. The total amount you can claim for all state and local taxes combined is limited to $10,000 per household, or $5,000 if married filing separately.

Home Mortgage Interest

Interest paid on a home mortgage is a common deduction. The rules allow for the deduction of interest on mortgage debt used to buy, build, or substantially improve a primary or second home. For mortgages taken out after December 15, 2017, interest is deductible on a total mortgage debt up to $750,000 for married couples filing jointly, or $375,000 for those married filing separately. The deduction also applies to points paid at closing.

Charitable Contributions

Donations made to qualified charitable organizations can be deducted. This includes cash contributions and the fair market value of property or goods donated. The amount you can deduct is limited to a percentage of your AGI, up to 60% for cash contributions to public charities. Stricter rules and lower AGI limits apply to donations of property and contributions to certain private foundations.

Casualty and Theft Losses

A personal casualty or theft loss is only deductible if it occurred in a federally declared disaster area. The amount of the loss is first reduced by any insurance reimbursement received and then by $100 per event. The total of all such losses for the year is only deductible to the extent it exceeds 10% of your AGI.

Calculating Your Total Itemized Deductions

Each category of deduction requires specific records to substantiate your claims. To deduct home mortgage interest, you will need Form 1098, the Mortgage Interest Statement, from your lender. This form states the amount of interest and any points you paid during the year.

For state and local taxes, your records will include W-2 forms showing state income tax withheld, property tax bills, and records of any estimated state tax payments. If you choose to deduct sales taxes instead of income taxes, you can use the IRS’s optional sales tax tables or your actual receipts.

Charitable contributions require documentation. For any cash or non-cash donation of $250 or more, you must have a written acknowledgment from the charity. If you donate property valued over $500, you must complete and attach Form 8283 to your return.

Medical expense records include receipts from doctors and hospitals, pharmacy records, and statements showing health insurance premiums paid with after-tax money. All these figures are then entered on the appropriate lines of Schedule A (Form 1040) to tally your total itemized deductions.

Circumstances Requiring You to Itemize

In specific situations, taxpayers are not permitted to take the standard deduction and must itemize. One of the most frequent scenarios involves married couples who choose to file separate tax returns. If one spouse decides to itemize their deductions, the other spouse is also required to itemize.

Individuals who are not U.S. citizens for the full tax year are also barred from taking the standard deduction. This applies to nonresident aliens and dual-status aliens. An exception exists for those married to a U.S. citizen or resident who elect to be treated as a resident for the entire year.

A less common situation that necessitates itemizing is when an individual files a tax return for a period shorter than 12 months. This can happen if a person changes their annual accounting period. In such a case, the taxpayer must itemize any eligible expenses.