Itemized Deductions (Schedule A) — 2025
Itemize only if total exceeds standard deduction. TCJA/OBBBA eliminated the overall limitation on itemized deductions (Pease limitation) permanently. OBBBA permanently eliminates the 2%-of-AGI miscellaneous itemized deductions after 2025 (currently suspended 2018-2025).
Medical & Dental Expenses
Deduct unreimbursed medical expenses exceeding 7.5% of AGI. Includes: doctors, dentists, hospital stays, prescriptions, insurance premiums, long-term care, mileage (2025: $0.21/mile for medical travel), glasses, hearing aids, service animals, smoking-cessation programs, weight-loss program for specific disease (not general health).
Not deductible: cosmetic surgery, non-prescription drugs (except insulin), general health club dues, funeral expenses, vitamins, spa/gym memberships (general health only).
Paid in year: Deduct expenses paid during the tax year, regardless of when services rendered. Can deduct for taxpayer, spouse, and dependents.
- Divorced/separated parents: either parent can deduct medical expenses paid for a child, even if the other parent claims the child as a dependent.
- Dependent parents: can deduct medical expenses paid for a dependent parent even if the parent does not live with the taxpayer.
Long-term care insurance premium deduction limits (2025, per person):
| Age at year-end | 2025 limit |
|---|---|
| 40 or under | $480 |
| 41-50 | $900 |
| 51-60 | $1,800 |
| 61-70 | $4,810 |
| 71+ | $6,020 |
State & Local Taxes (SALT)
Deduct up to $40,000 ($20,000 MFS) combined for 2025 (OBBBA raised from $10K):
- State and local income taxes OR sales taxes (pick one — use IRS optional sales tax table, may add actual sales tax on big-ticket items)
- Real estate taxes (must be assessed on property value; foreign real estate tax NOT deductible on Schedule A; HOA fees and assessments for improvements NOT deductible)
- Personal property taxes (must be based on value and assessed annually — e.g., DMV fees based on car value)
Phaseout: MAGI >$500,000 ($250,000 MFS) — cap reduced by 30% of excess, floor at $10,000 ($5,000 MFS). 2026: $40,400; increases 1%/yr through 2029. Reverts to $10,000 in 2030.
Foreign income tax: Deductible on Schedule A as an itemized deduction and NOT subject to the SALT cap (or take Foreign Tax Credit instead — not both same year).
Home Mortgage Interest
Acquisition debt (used to buy, build, or substantially improve home): Interest on up to $750,000 ($375,000 MFS) is deductible. Loan must be secured by the home. Applies to main home and ONE second home.
Home equity debt (after 2017): Only deductible if used to buy, build, or substantially improve the home securing the loan.
Late fees and prepayment penalties: Deductible as mortgage interest.
Points: Generally amortized over loan life, but can deduct in year paid if: loan is for purchase/improvement of primary residence, paying points is standard practice in area, points are within normal range. Refinance points amortized over loan life (unless proceeds improve the home).
Note on mortgage insurance premiums (PMI): The PMI deduction expired after 2021 and was not extended by OBBBA for 2025. Do NOT assume PMI is deductible for 2025 unless Congress acts. (Flagged for verification — not addressed in HOCK study material.)
Charitable Contributions
Cash contributions: Generally up to 60% of AGI. Temporary 100% limit expired.
Non-cash contributions: FMV (clothing/household items must be in good used condition). Different AGI limits by property type (50%/30%/20%). Excess carries forward 5 years. Cannot create an NOL.
Mileage: $0.14/mile for charitable service (2025).
Qualified Charitable Distribution (QCD): Taxpayer ≥70.5 may direct up to $108,000 (2025) from a traditional/Roth IRA directly to a qualified charity. QCD counts toward RMD, is excluded from income, and is NOT also deductible as a charitable contribution. Must be trustee-to-trustee direct transfer.
Documentation: Receipt required for $250+, written acknowledgment from charity for $250+. For non-cash >$500: Form 8283. For non-cash >$5,000: qualified appraisal generally required. Vehicle donation: if deduction >$500 and charity sells the vehicle, deduct lesser of (gross proceeds, FMV at donation); charity provides Form 1098-C.
NOT deductible: contributions to non-qualified organizations (civic leagues, political organizations, foreign charities w/o reciprocity), direct gifts to individuals, value of volunteer time (only out-of-pocket expenses deductible).
Casualty & Theft Losses
Deductible ONLY if from federally declared disaster. $100 per casualty floor (+10% of AGI). For Qualified Disaster Losses (QDL): $500 per event, no 10% AGI floor, AND may be added to the standard deduction (deductible without itemizing). Calculated: lesser of (decline in FMV, adjusted basis) − insurance − $100 − 10% AGI.
Can elect to deduct disaster loss in the year it occurred OR the prior year (file amended prior-year return).
Gambling Losses
Deductible up to winnings. Must itemize to claim. Keep detailed records. (2026+: OBBBA reduces to 90% of losses.)
Investment Interest Expense
Deductible up to net investment income. Filed on Form 4952. Unused amounts carry forward.
Deductions NOT Subject to 2% Floor (Still Available)
OBBBA permanently eliminates 2%-floor miscellaneous itemized deductions after 2025. Still deductible (not subject to 2% floor):
- Gambling losses (up to winnings)
- Casualty/theft losses from federal disasters
- Impairment-related work expenses for disabled persons
- Federal estate tax on IRD (income in respect of decedent)
- Amortizable bond premium on taxable bonds
- Ponzi-type investment scheme losses
- Losses on income-producing property
- Repayment >$3,000 under claim of right (§1341)
- Unrecovered investment in annuity
Nonresident Alien Itemized Deductions (Form 1040-NR)
NRAs cannot take the standard deduction. Limited Schedule A deductions: state/local income taxes, US charitable contributions, casualty losses in presidentially declared disasters, certain misc. deductions. Cannot deduct mortgage interest, medical, or most other items.