Table of Contents

What Are Itemized Tax Deductions? Definition and Impact on Taxes

By

Julia Kagan

Updated November 07, 2024

Reviewed by

Janet Berry-Johnson

Fact checked by

Vikki Velasquez

Part of the Series

Federal Income Tax Guide

Tax Preparation

Getting Help

Tax Strategy

Tax Credits and Deductions

Retirement and Your Taxes

Tax Filing

Tax Refunds

Tax Security

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What Are Itemized Deductions?

An itemized deduction is an expense that can be subtracted from your adjusted gross income (AGI) to reduce your taxable income and lower the amount of taxes you owe. Taxpayers can itemize deductions like mortgage interest, charitable gifts, and unreimbursed medical expenses, or choose to take the standard deduction, a fixed dollar amount that varies by filing status.

Key Takeaways

An itemized deduction is an expense that can be subtracted from adjusted gross income to reduce your tax bill.
Itemized deductions must be listed on Schedule A of Form 1040.
Taxpayers can choose to itemize deductions or claim the standard deduction that applies to their filing status.

Understanding Itemized Deductions

Itemized deductions reduce your taxable income, and your savings depend on your tax bracket. Suppose an unmarried single filer with a gross income of $80,000 claims itemized deductions totaling $15,000. Subtracting those deductions from gross income yields a taxable income of $65,000, which falls within a 22% marginal tax rate bracket for 2024 and 2025.

Itemized deductions are recorded on Schedule A of Form 1040. Taxpayers must save all receipts and documentation of expenses reported in case the Internal Revenue Service (IRS) requests them in an audit. Additional proof can include bank statements, insurance bills, medical bills, and tax receipts from qualified charitable organizations.

Tax deductions should not be confused with tax credits, which directly reduce your tax bill. If you calculate your taxes due as $14,000 and are eligible for a $1,000 tax credit, your bill is cut by $1,000 to $13,000.

Itemized Deduction vs. Standard Deduction

The majority of taxpayers have the option to itemize deductions or claim the standard deduction. Nonresident aliens must itemize, and married individuals who are filing separately each must claim the same type of deduction.

The decision depends on which deduction type garners the lowest tax liability. If you file as a single taxpayer or are married and filing separately, you will fare better with the standard deduction of $14,600 for 2024 and $15,000 for 2025 if your itemized deductions total less than that amount.

Standard Deductions for 2024 and 2025
Filing Status	2024 Standard Deduction	2025 Standard Deduction
Single	$14,600	$15,000
Married Filing Separately	$14,600	$15,000
Head of Household	$21,900	$22,500
Married Filing Jointly	$29,200	$30,000

What Can I Itemize?

The list of expenses that can be itemized is extensive and can include some medical expenses, mortgage interest, charitable contributions, and state and local taxes. You can view the list on the IRS website. Taxpayers use Schedule A, part of IRS Form 1040, to calculate and list deductions.

Schedule A can be downloaded from the IRS website.

You can deduct mortgage interest on a loan of $750,000 or less for a home bought on or after Dec. 16, 2017, and charitable donations of up to 60% of your AGI but it depends on the type of contribution and the charity.

You can also deduct qualified, unreimbursed medical and dental expenses over 7.5% of AGI; state and local income or sales taxes plus real estate and personal property taxes up to $10,000 or $5,000 if married filing separately, gambling losses, and investment interest less than investment income.

What Can You Itemize?

Deductions You Can Itemize

Mortgage interest on the first $750,000 of indebtedness—or $1 million, if you bought the home before Dec. 16, 2017
Charitable contributions up to 60% of AGI
Medical and dental expenses over 7.5% of AGI
State and local income, plus either personal property or sales taxes up to IRS threshold
Gambling losses up to total amount won
Investment interest

Deductions You Cannot Itemize

Mortgage interest on loan amounts over $750,000, unless you bought your home before Dec. 16, 2017
State and local income, sales, and personal property taxes beyond IRS threshold
Unreimbursed employee expenses
Tax preparation expenses
Natural disaster losses unless in a federally declared disaster area

What Does It Mean to Claim Itemized Deductions?

When you file your income tax return, you can take the standard deduction, a fixed dollar amount based on your filing status, or you can itemize your deductions. Unlike the standard deduction, the dollar amount of itemized deductions will vary by taxpayer, depending on the expenses on Schedule A of Form 1040. The amount is subtracted from the taxpayer’s taxable income.

Which Expenses Can I Itemize?

You itemize your deductions on Schedule A of Form 1040. You can generally deduct unreimbursed medical and dental expenses, long-term care premiums, home mortgage interest, charitable donations, certain taxes, casualty and theft losses, and some gambling losses.

Who Should Itemize Deductions?

You have the option to take the standard deduction or itemize your deductions. If the value of expenses you can itemize is greater than the standard deduction, then it likely makes sense to itemize.

What Are the Standard Deduction Amounts for 2023 and 2024?

For single taxpayers and those who are married but filing separately, the standard deduction is $14,600 in 2024 and $15,000 in 2025. For heads of households, the standard deduction is $21,900 in 2024 and $22,500 in 2025. For taxpayers who are married and filing jointly, the standard deduction is $29,200 in 2024 and $30,000 in 2025.

The Bottom Line

An itemized deduction is an expense that can be subtracted from your adjusted gross income (AGI) to reduce your tax bill. Taxpayers can itemize deductions or claim the standard deduction that applies to their filing status. Itemized deductions must be listed on Schedule A of Form 1040 and may include mortgage interest, charitable gifts, and unreimbursed medical expenses.

Article Sources

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