Itemized deductions let you subtract specific household and personal expenses from your taxable income instead of taking a single flat deduction

When you file taxes, you get to reduce the income the IRS taxes you on. You can do this in one of two ways: take the standard deduction, which is a fixed dollar amount that changes each year, or itemize deductions, which means listing out individual expenses you paid during the year and adding them up. The IRS lets you choose whichever method gives you the bigger deduction—and therefore a lower tax bill.

Itemizing makes sense only if your total deductible expenses add up to more than the standard deduction for your filing status. For the 2024 tax year, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly. If your mortgage interest, property taxes, charitable donations, and medical expenses combined exceed that number, itemizing saves you money. If they don't, the standard deduction is simpler and gives you the same or better result.

Key Takeaways

  • Itemized deductions are specific expenses you can subtract from your income, and you choose this method only if your total deductible expenses exceed the standard deduction for your filing status.
  • Common deductible expenses include mortgage interest, state and local property taxes (capped at $10,000 per year), charitable donations, and unreimbursed medical expenses above 7.5 percent of your income.
  • You cannot deduct both itemized deductions and the standard deduction in the same year—the IRS requires you to pick one method.
  • Keeping receipts, donation records, and mortgage statements throughout the year makes itemizing much easier when you file.

What expenses you can deduct if you itemize

The IRS publishes a list of deductible expenses in Publication 17, which you can find on the IRS website. The most common ones for homeowners and renters are mortgage interest (the interest portion of your monthly payment, not the principal), state and local property taxes, state and local income taxes, and charitable donations to may have access to organizations.

Medical and dental expenses are deductible, but only the amount that exceeds 7.5 percent of your adjusted gross income (AGI). If your AGI is $60,000 and you spent $8,000 on medical bills, you can deduct only the $3,500 that exceeds $4,500 (7.5 percent of $60,000). Unreimbursed employee business expenses, investment losses, and casualty losses from theft or disaster are also deductible under specific conditions, though the rules are stricter than they used to be.

Sales tax is deductible in some cases—you can deduct either state and local sales taxes or state and local income taxes, but not both. Most people choose income taxes because the number is easier to find on their tax return or W-2 form.

The $10,000 cap on state and local taxes

Starting in 2018, the IRS capped the total deduction for state and local taxes (often called SALT) at $10,000 per year for all filers. This means if you live in a high-tax state and pay $15,000 in property taxes plus $8,000 in state income tax, you can deduct only $10,000 of that combined total, not the full $23,000.

This cap applies whether you are single or married filing jointly, and it has made itemizing less valuable for people in high-tax states. Some states have tried to work around this limit by allowing business owners to deduct business taxes separately, but the IRS has restricted those workarounds. The cap is set to expire after 2025 unless Congress extends it, so the rules may change.

When itemizing saves you money versus the standard deduction

The decision is straightforward math. Add up all your deductible expenses for the year. If the total is higher than the standard deduction for your filing status, itemize. If it is lower, take the standard deduction.

A married couple with a $400,000 home, a $12,000 annual mortgage interest payment, $8,000 in property taxes, and $5,000 in charitable donations would have $25,000 in itemized deductions. Since that exceeds the $29,200 standard deduction for 2024, they would still take the standard deduction. But if they also had $6,000 in unreimbursed medical expenses (above the 7.5 percent threshold), their total would reach $31,000, making itemizing worthwhile.

People who rent instead of own a home have fewer deductible expenses available, since they cannot deduct rent or property taxes. Renters who itemize typically rely on charitable donations, medical expenses, and state income taxes to reach the threshold.

How to keep records for itemized deductions

The IRS does not require you to attach receipts to your tax return, but you must keep them for at least three years in case of an audit. For mortgage interest, your lender sends you a Form 1098 each January showing how much interest you paid that year—use that number, not your own records. For property taxes, your county assessor's office or tax bill shows what you paid.

Charitable donations require written acknowledgment from the organization if the donation is $250 or more. For donations under $250, keep your receipt or bank statement showing the donation. Medical expenses should be documented with receipts from providers, pharmacies, and insurance companies showing what you paid out of pocket.

Many people use tax software or a spreadsheet to track these expenses throughout the year rather than scrambling to find receipts in December. If you work with a tax preparer or accountant, bring them a folder with your mortgage statement, property tax bill, charitable donation receipts, and medical expense records.

Itemizing versus the standard deduction for different household types

Homeowners with mortgages are the most likely to benefit from itemizing, especially in states with high property taxes. A homeowner in New Jersey or California with a mortgage and significant property taxes may itemize every year. A homeowner in a low-tax state with a small mortgage may find the standard deduction better.

Renters almost never itemize unless they have very high charitable donations or significant unreimbursed medical expenses, because they lack the mortgage interest and property tax deductions that push homeowners over the threshold. Retirees on fixed incomes may also find the standard deduction simpler, since they have fewer business expenses and often lower overall deductible expenses.

Self-employed people and business owners have access to different deductions—business expenses, home office deductions, and self-employment tax deductions—that are separate from itemized deductions. These are taken "above the line," meaning they reduce your income before you even decide whether to itemize or take the standard deduction.

Common mistakes when itemizing

The most common mistake is forgetting that you cannot take both itemized deductions and the standard deduction in the same year. You must choose one. Some people also forget the $10,000 SALT cap and overestimate their deduction. Others deduct expenses that are not actually deductible—for example, homeowners' insurance, utilities, and home repairs are not deductible for personal residences, though they are deductible if you rent out a property.

Another frequent error is deducting charitable donations without proper documentation. The IRS is strict about this: a cancelled check alone is not enough for donations of $250 or more. You need a written acknowledgment from the charity stating the amount and whether you received anything in return (such as a dinner at a fundraiser).

Finally, some people itemize in years when they should not. If your deductible expenses are only slightly above the standard deduction, the extra complexity and record-keeping may not be worth the small tax savings. Tax software can calculate both scenarios for you automatically, so you can see which method actually benefits you.

Frequently Asked Questions

Can I deduct my home mortgage payment?

You can deduct the interest portion of your mortgage payment, not the principal. Your lender reports this on Form 1098 each year. You cannot deduct property taxes as a separate line item if you itemize—they count toward your $10,000 SALT cap along with state income taxes.

What counts as a charitable donation?

Donations to may have access to organizations—churches, nonprofits, schools, and public charities—are deductible. Donations to individuals, political campaigns, or candidates are not. The organization should have tax-exempt status; you can check the IRS website to verify before donating.

Do I need to file a special form to itemize?

You report itemized deductions on Schedule A, which attaches to your Form 1040. Tax software walks you through this automatically. If you use a tax preparer, they handle the form for you based on the information you provide.

What if my deductible expenses are close to the standard deduction?

Use tax software or a calculator to run both scenarios. Some years you may itemize, and other years the standard deduction may be better. This is especially common for people whose deductible expenses fluctuate—for example, if you had a major medical event one year or made a large charitable donation.

Can I deduct state income tax if I paid sales tax instead?

You can deduct either state income tax or state sales tax, but not both in the same year. Most people deduct state income tax because the amount is shown on their tax documents. You would only deduct sales tax if you live in a state with no income tax or if your sales tax was unusually high due to a major purchase.