What Are Itemized Deductions?

The 2017 Tax Cuts and Jobs Act (TCJA) significantly increased the standard deduction, leading many taxpayers to stop itemizing because the flat deduction was more efficient. However, the One Big Beautiful Bill Act (OBBBA) went into effect for the 2025 tax year and introduced changes that continue into 2026. Because deduction limits and caps have been adjusted, itemizing – the process of listing and subtracting specific eligible expenses from your total income – is once again a viable strategy for households that previously found the standard deduction more beneficial.

Standard Deduction vs. Itemized Deductions: What’s the Difference?

The standard deduction is a fixed dollar amount the IRS allows you to subtract from your adjusted gross income. For the 2026 tax year, the standard deduction is $16,100 for single filers and $32,200 for those filing jointly.

Itemizing involves listing specific expenses on Schedule A of your tax return, including mortgage interest, real estate taxes, state and local taxes, and charitable gifts. The rule for choosing between the two is simple: you use the method that results in the larger deduction. Because the OBBBA has increased the limits on certain itemized categories, many taxpayers who previously defaulted to the standard deduction may find that itemizing now provides a better path to lower tax liability.

The New SALT Cap

The most significant update for many taxpayers is the expansion of the State and Local Tax (SALT) deduction. Under previous rules, this deduction was capped at $10,000, which often prevented homeowners in high-tax areas from seeing the full benefit of their property and state income tax payments. For 2026, the OBBBA has increased this cap to $40,400.

This change can be a substantial benefit for those who own property or live in states with higher income tax rates. However, this higher limit is subject to a phase-out. For filers with a Modified Adjusted Gross Income (MAGI) exceeding $505,000, the cap begins to decrease. Once income surpasses approximately $606,000, the deduction reverts to the original $10,000 limit. Understanding where your income falls within this range can help you determine the actual value of your SALT deduction.

Itemized Deductions You Can Claim in 2026

To determine if itemizing is the right choice, you must track all eligible expenses closely. The following categories represent the primary deductions available on Schedule A this year.

Mortgage Interest and PMI

You can deduct interest paid on up to $750,000 of mortgage debt used to buy, build, or improve your primary or secondary home. Additionally, the OBBBA has reinstated the deduction for Private Mortgage Insurance (PMI). Starting in 2026, PMI premiums are treated as deductible mortgage interest, though this benefit begins to phase out for those with an adjusted gross income (AGI) over $100,000.

Charitable Contributions

Cash donations to qualified 501(c)(3) organizations are generally deductible up to 60% of your Adjusted Gross Income (AGI). It is important to note that for 2026, itemizers must clear a 0.5% AGI floor before charitable gifts start to provide a tax benefit. For those who do not itemize, a separate “above-the-line” deduction of up to $1,000 ($2,000 for joint filers) is available for cash gifts.

Medical Expenses

Unreimbursed medical and dental expenses are deductible once they exceed 7.5% of your AGI. This includes everything from doctor visits and surgeries to preventative care and certain travel costs for medical treatment.

Tips for Maximizing Your Deductions

Keeping track of potential deductions throughout the year makes tax season more manageable. Consistent organization is the best way to prevent missed opportunities.

• Maintain Detailed Records: Keep thorough records of all deductible expenses, including receipts, invoices, and statements.
• Leverage Simple Tracking: Recording expenses as they’re incurred prevents errors and forgotten expenses in April. Simple tools like Microsoft Excel are effective for manual tracking, while various apps can help automate the process.

Are Itemized Deductions Right for You This Year?

Deciding whether to itemize isn’t necessarily straightforward. Because the OBBBA has shifted various thresholds and caps, the most beneficial filing method for your specific situation can change year to year. Determining the right path requires an annual review of your eligible expenses against the current standard deduction.

The Hechtman Group is an experienced partner in navigating these 2026 changes. We work with you to model your tax liability and help you choose the path that most effectively minimizes your tax bill. Contact us today to schedule a planning session.

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