Itemized Deduction Categories

Itemized deductions can help reduce your taxable income, saving you money on taxes. Key categories include medical expenses, state and local taxes, mortgage interest, charitable contributions, casualty losses, and miscellaneous deductions, each with specific rules and limits.

1. Medical and dental expenses

   • Deductible expenses include payments for medical care, dental treatments, and certain long-term care services.
   • Only the portion of total medical expenses that exceeds 7.5% of your adjusted gross income (AGI) is deductible.
   • Eligible expenses can include insurance premiums, prescription medications, and necessary medical equipment.

2. State and local taxes

   • You can deduct state and local income taxes or sales taxes, but not both; choose the one that benefits you more.
   • Property taxes on real estate are also deductible, but must be assessed on the value of the property.
   • The total deduction for state and local taxes is capped at $10,000 ($5,000 if married filing separately).

3. Home mortgage interest

   • Interest paid on a mortgage for your primary residence and a second home is generally deductible.
   • The deduction applies to mortgage debt up to $750,000 for loans taken out after December 15, 2017 (or $1 million for loans prior).
   • Points paid on a mortgage can also be deductible, potentially allowing for a larger upfront deduction.

4. Charitable contributions

   • Donations to qualified charitable organizations are deductible, including cash, property, and certain expenses incurred while volunteering.
   • Generally, you can deduct contributions up to 60% of your AGI, but limits may vary based on the type of donation.
   • Keep records of all contributions, including receipts and bank statements, to substantiate your deductions.

5. Casualty and theft losses

   • Deductible losses must be due to a federally declared disaster or theft, and must exceed $100 per event.
   • The total loss is subject to a further reduction of 10% of your AGI.
   • Documentation of the loss, including police reports and appraisals, is essential for claiming this deduction.

6. Miscellaneous itemized deductions (subject to 2% AGI floor)

   • These deductions include unreimbursed employee expenses, tax preparation fees, and certain investment expenses.
   • Only the amount that exceeds 2% of your AGI is deductible, which can limit the benefit for many taxpayers.
   • This category was largely eliminated for tax years 2018 through 2025 under the Tax Cuts and Jobs Act, so check current regulations for applicability.