What Expenses Are Included in Itemized Deductions?

The expenses included in itemized deductions fall into six categories reported on Schedule A of Form 1040: state and local taxes, home mortgage interest, medical and dental expenses, charitable contributions, casualty and theft losses from federally declared disasters, and gambling losses.¹ Each category has its own rules, dollar limits, and documentation requirements, and several of them work differently in 2026 than they did in prior years because of the One Big Beautiful Bill Act.

When Itemizing Is Worth It

Itemizing only helps if your qualifying expenses add up to more than the standard deduction for your filing status.² For 2026, the standard deduction is $32,200 for married filing jointly, $16,100 for single filers and married filing separately, and $24,150 for head of household.³ Filers 65 or older or legally blind get additional standard deduction amounts on top of those figures, and a new enhanced deduction of $6,000 for seniors ($12,000 for two qualifying spouses) is available through 2028 subject to income phase-outs.⁴

The choice is made year by year. There’s no rule forcing you to stay consistent, so a year with heavy medical bills, a home purchase, or a large charitable gift may be an itemizing year even when other years aren’t.

State and Local Taxes

The SALT deduction covers three types of non-federal taxes you paid during the year: state and local income taxes (or, as an alternative, general sales taxes), real estate property taxes, and personal property taxes based on value.⁵ The vehicle registration fee is a common example of the third category, but only the portion tied to the car’s value counts.

You have to choose between deducting state income taxes or state sales taxes; you can’t claim both. The sales tax route is most useful if you live in a state without an income tax. Actual receipts work, or you can use the IRS sales tax tables and add tax paid on large purchases like vehicles or boats.⁵

All three categories share a single combined cap. For 2026 that cap is $40,400 ($20,200 for married filing separately). Someone paying $25,000 in state income tax and $20,000 in property tax still stops at $40,400. The cap increases 1% annually through 2029 and then reverts to $10,000 in 2030 unless Congress extends it. Higher earners see the cap shrink: once modified AGI exceeds roughly $505,000 in 2026, the cap is reduced by 30% of the excess income, but it never falls below $10,000.

Some payments that look like taxes don’t count. Federal income tax, Social Security, and Medicare taxes are never deductible on Schedule A.⁵ Neither are trash collection fees, parking tickets, or licensing fees. Foreign income taxes take a different path entirely, claimed as a credit on Form 1116 rather than deducted on Schedule A.⁶

Home Mortgage Interest

Interest on a mortgage for your main home or one additional residence is deductible if the loan is “acquisition debt,” meaning the borrowed money was used to buy, build, or substantially improve the home securing it.⁷ Routine maintenance does not count as a substantial improvement; the work has to add value or meaningfully extend the home’s useful life.

The deduction applies to interest on the first $750,000 of acquisition debt, or $375,000 for married filing separately. Loans taken out on or before December 15, 2017 are grandfathered under the older $1 million cap ($500,000 married filing separately), and if you carry both, the newer loan’s $750,000 limit is reduced by the outstanding balance of the older one.⁸ Your lender sends Form 1098 each year showing interest paid; if your balance exceeds the limit, you’ll need to prorate the deductible portion yourself.⁹

Home Equity Loans and HELOCs

Interest on a home equity loan or HELOC is deductible only if the funds were used to buy, build, or substantially improve the home securing the loan.⁷ Using a HELOC to pay off credit cards or fund a vacation makes the interest nondeductible. Keep records that connect the loan proceeds to a qualifying improvement, because the burden of proof is on you.

Points and Mortgage Insurance Premiums

Points are prepaid interest paid at closing to lower your rate. On a primary residence purchase, points can often be deducted in full in the year paid. On a refinance or second home, they generally have to be spread over the life of the loan. The charge has to represent prepaid interest, not a service fee, to qualify.

Starting in 2026, private mortgage insurance premiums are deductible again. The One Big Beautiful Bill Act made the PMI deduction permanent after years of temporary renewals, so PMI premiums on acquisition debt are treated like mortgage interest. If you put less than 20% down on a conventional loan and pay PMI, that’s newly worth tracking.

Second Homes That Also Get Rented

If you rent out a second home part of the year, whether the mortgage interest belongs on Schedule A depends on how the days split between personal and rental use. Heavy personal use keeps it a personal residence with Schedule A treatment; heavy rental use shifts expenses to Schedule E instead. Publication 527 has the specifics.¹⁰

Medical and Dental Expenses

Unreimbursed medical and dental expenses are deductible, but only the portion exceeding 7.5% of your AGI.¹¹ With $100,000 AGI, you need more than $7,500 in qualifying costs before anything reaches Schedule A, and only the excess counts.

Qualifying expenses cover the diagnosis, treatment, and prevention of disease: doctor and hospital visits, prescription medications, dental work, eyeglasses, hearing aids, and certain long-term care services. Travel to and from medical appointments qualifies, including mileage at the IRS medical rate.

Health insurance premiums count only when paid with after-tax dollars. Premiums taken pre-tax from your paycheck don’t qualify, and expenses already reimbursed through an HSA or FSA can’t be deducted again. No double-dipping.

Timing runs on when you pay, not when you receive the service. A December surgery paid in January belongs on the following year’s return. Insurance reimbursements reduce the deductible amount, and if a reimbursement arrives after you’ve already deducted the expense, you may need to report it as income in the year received.

Charitable Contributions

Donations to IRS-recognized tax-exempt organizations are deductible. Political organizations, lobbying groups, and gifts to specific individuals do not qualify. The IRS Tax Exempt Organization Search tool lets you verify whether a group qualifies.¹²

AGI Limits by Contribution Type

How much you can deduct in one year is capped as a percentage of your AGI, and the percentage depends on what you gave:

Cash to public charities: up to 60% of AGI
Noncash property to public charities: up to 50% of AGI, after cash contributions
Appreciated capital gain property at fair market value: up to 30% of AGI
Contributions to certain private foundations and veterans’ organizations: up to 30% of AGI
Capital gain property “for the use of” a qualifying organization: up to 20% of AGI

The 60% cash limit for public charities is now permanent.¹³ Contributions above the applicable ceiling carry forward for up to five years.

Substantiation

Documentation rules are strict. Any monetary gift requires a bank record, receipt, or written communication from the charity. Any single contribution of $250 or more needs a written acknowledgment stating the amount (or describing the property), plus whether the charity provided anything in return. Noncash donations over $5,000 require a qualified appraisal.¹² Without proper records, the deduction is gone. Get a receipt every time, even for smaller amounts.

When You Receive Something in Return

If a donation buys you something of value, only the portion above that value is deductible. A $200 gala ticket that includes a $75 dinner is a $125 deduction. The charity is required to give you a good-faith estimate of what it provided.¹⁴

Casualty and Theft Losses

Personal casualty and theft losses are deductible only in narrow circumstances. The loss must come from a federally declared disaster or, starting in 2026, a disaster declared by your state’s governor and recognized by the Secretary of the Treasury.¹⁵ Everyday events like a stolen bicycle or storm damage outside a declared area don’t qualify.

Two reductions apply before anything becomes deductible. Each separate casualty event is reduced by $100, and total net casualty losses for the year must exceed 10% of AGI, with only the amount above that floor deductible. Insurance reimbursements reduce the loss dollar-for-dollar, so you must file a claim first. The reporting form is Form 4684.

One exception: if you have casualty gains (insurance payouts exceeding your basis in destroyed property), you can deduct casualty losses even outside a declared disaster, but only up to the amount of those gains. Losses that exceed taxable income can be carried forward.¹⁵

Gambling Losses

Gambling winnings are fully taxable, and losses can be deducted only if you itemize and only up to the amount of winnings you report. Beginning in 2026, the One Big Beautiful Bill Act adds a further limit: only 90% of your gambling losses are deductible, and the disallowed 10% does not carry forward.

The practical effect surprises recreational gamblers. Someone who wins $10,000 and loses $10,000 in the same year still owes tax on $1,000, because only $9,000 of the losses is allowed.

Claiming any gambling loss requires an accurate diary or log of winnings and losses, backed by receipts, tickets, and statements.¹⁶ Casino win/loss statements help but don’t stand alone. The IRS expects a contemporaneous record kept at the time, not a year-end reconstruction.

Records and Planning

Itemizing rewards good recordkeeping. Three points tend to separate taxpayers who benefit from those who leave money behind.

You decide fresh each year. Bunching deductible expenses like charitable gifts or elective medical work into a single year, then taking the standard deduction the next, is a common strategy to cross the standard deduction threshold at least sometimes.

AGI drives most of the limits. The 7.5% medical floor, the charitable percentage ceilings, the SALT cap phase-down, and the 10% casualty floor all key off AGI. A lower AGI makes more of your expenses deductible, so anything that shifts income timing has downstream effects on Schedule A.

Keep documentation as you go. Reconstructing medical bills, charitable receipts, and tax payments during filing season is where deductions get lost. A simple folder or scan system throughout the year is the difference between claiming what you’re owed and guessing.¹⁷

1
Internal Revenue Service. Schedule A (Form 1040) – Itemized Deductions
2
Internal Revenue Service. Topic No. 551, Standard Deduction
3
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
4
Internal Revenue Service. Check Your Eligibility for the New Enhanced Deduction for Seniors
5
Internal Revenue Service. Topic No. 503, Deductible Taxes
6
Internal Revenue Service. Foreign Tax Credit
7
Internal Revenue Service. Publication 936, Home Mortgage Interest Deduction
8
Office of the Law Revision Counsel. 26 USC 163 – Interest
9
Internal Revenue Service. Instructions for Form 1098
10
Internal Revenue Service. Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses)
11
Internal Revenue Service. Topic No. 502, Medical and Dental Expenses
12
Internal Revenue Service. Topic No. 506, Charitable Contributions
13
Internal Revenue Service. Publication 526, Charitable Contributions
14
Internal Revenue Service. Charitable Contributions – Quid Pro Quo Contributions
15
Congress.gov. The Nonbusiness Casualty Loss Deduction
16
Internal Revenue Service. Topic No. 419, Gambling Income and Losses
17
Internal Revenue Service. Instructions for Schedule A (Form 1040)