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Schedule A: Itemized Deductions Guide (SALT $40K Cap)

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

Schedule A is the IRS form you use to claim itemized deductions instead of the standard deduction on your federal tax return. For the 2026 tax year, the One Big Beautiful Bill dramatically changed the math on whether itemizing makes sense by raising the state and local tax (SALT) deduction cap from $10,000 to ~$40,000. That single change pushes millions of taxpayers past the standard deduction threshold who previously could not itemize.

This guide explains every section of Schedule A, the new SALT cap rules, and how to decide whether itemizing saves you money.

Where to Get Schedule A

Download Schedule A and its instructions at irs.gov/forms-pubs/about-schedule-a-form-1040. If you use tax software, it will generate Schedule A automatically when you enter deductible expenses.

Who Should Itemize?

You should itemize if your total itemized deductions exceed the standard deduction for your filing status:

Filing Status	2026 Standard Deduction
Single	~$15,000
Married Filing Jointly	~$30,000
Head of Household	~$22,500
Married Filing Separately	~$15,000

With the SALT cap now at ~$40,000, a married couple in a high-tax state who pays $30,000 in state income tax and $15,000 in property tax can now deduct $40,000 in SALT alone — well above their $30,000 standard deduction even before adding mortgage interest and charitable contributions.

Note: If you are married filing separately, you must both itemize or both take the standard deduction. One spouse cannot itemize while the other takes the standard.

Part I: Medical and Dental Expenses (Lines 1-4)

You can deduct unreimbursed medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI).

Deductible medical expenses include:

Doctor, dentist, and hospital bills not covered by insurance
Prescription medications and insulin
Health insurance premiums (if not deducted elsewhere)
Long-term care premiums (subject to age-based limits)
Medical equipment (wheelchairs, hearing aids, etc.)
Transportation to medical appointments (standard mileage rate or actual costs)
Vision care (exams, glasses, contacts, laser eye surgery)

Line-by-line:

Line 1: Total medical and dental expenses
Line 2: Your AGI (from Form 1040, Line 11)
Line 3: Line 2 multiplied by 7.5% (0.075)
Line 4: Subtract Line 3 from Line 1. If zero or negative, you get no medical deduction.

Example: AGI of $80,000 means your threshold is $6,000 (7.5% x $80,000). If you paid $10,000 in unreimbursed medical expenses, you deduct $4,000.

Common mistake: Including expenses reimbursed by insurance or paid with HSA/FSA funds. Those are not deductible.

Part II: Taxes You Paid (Lines 5-7) — The SALT Deduction

This section is where the SALT deduction lives, and it is the biggest area of change under the OBBB.

What You Can Deduct

Line 5a: State and local income taxes OR state and local sales taxes (you choose one, not both)
Line 5b: State and local personal property taxes (e.g., vehicle registration based on value)
Line 5c: State and local real estate taxes (property taxes on your home and other real property)
Line 5d: Total of lines 5a through 5c

The $40,000 SALT Cap

SALT Cap Detail	Amount
Standard cap	~$40,000
Married filing separately	~$20,000
MAGI phaseout begins	~$500,000
Phaseout rate	Reduced by ~$1 for every $1 over threshold
Inflation adjustment	~1% annually
Sunset	5 years (reverts to $10,000 after ~2030)

Line 5e: Enter the lesser of Line 5d or ~$40,000 (the cap)

If your modified AGI exceeds ~$500,000 (single) or ~$500,000 (MFJ — note the phaseout is not doubled for joint filers), the cap gradually decreases. At sufficiently high income levels, the cap can phase all the way back down to $10,000.

Line 6: Other Taxes

This includes generation-skipping transfer taxes on income distributions and any other deductible taxes not captured above.

Line 7: Total Taxes Paid

The sum of lines 5e and 6.

Common mistake: Deducting both state income taxes and state sales taxes. You must choose one or the other. In states with no income tax (Texas, Florida, Washington, etc.), the sales tax deduction is the only option.

Part III: Interest You Paid (Lines 8-10)

Mortgage Interest

Line 8a: Home mortgage interest and points from Form 1098
Line 8b: Home mortgage interest not reported on Form 1098 (e.g., paid to an individual)
Line 8c: Points not reported on Form 1098

Mortgage interest limits:

Mortgages taken out after December 15, 2017: Interest deductible on up to ~$750,000 of acquisition debt
Mortgages taken out on or before December 15, 2017: Interest deductible on up to $1,000,000
Home equity loan interest: Deductible only if used to buy, build, or substantially improve the home

Line 9: Investment Interest

Interest paid on money borrowed to purchase taxable investments. Limited to net investment income. Excess carries forward.

Line 10: Total Interest Paid

The sum of lines 8 through 9.

Common mistake: Deducting interest on a home equity loan used for personal expenses (like a vacation or car purchase). That interest has not been deductible since 2018.

Part IV: Gifts to Charity (Lines 11-14)

Deductible Charitable Contributions

Line 11: Gifts by cash or check (generally limited to 60% of AGI for cash contributions to public charities)
Line 12: Gifts other than cash or check (clothing, household items, vehicles — must be in good condition)
Line 13: Carryover from prior years (excess contributions that exceeded AGI limits)
Line 14: Total charitable contributions

Documentation requirements:

Contributions under $250: Bank record or written receipt
Contributions of $250 or more: Written acknowledgment from the charity
Noncash contributions over $500: Form 8283 required
Noncash contributions over $5,000: Qualified appraisal required (except for publicly traded securities)

Common mistake: Claiming the value of your time or services as a charitable deduction. You can deduct out-of-pocket expenses related to volunteer work (mileage at 14 cents per mile, supplies, etc.) but not the value of your time.

Part V: Casualty and Theft Losses (Line 15)

You can deduct casualty and theft losses only if the loss is attributable to a federally declared disaster. Personal casualty and theft losses from non-disaster events (burglary, fire not related to a disaster, etc.) are not deductible.

Line 15: Net casualty and theft loss from Form 4684 (after $100 per-event floor and 10% AGI threshold)

Part VI: Other Itemized Deductions (Line 16)

This line captures a small number of miscellaneous deductions that survived the TCJA, including:

Gambling losses (up to the amount of gambling winnings)
Casualty and theft losses from income-producing property
Federal estate tax on income in respect of a decedent
Certain unrecovered pension investments

Note: The broad category of “miscellaneous itemized deductions subject to the 2% AGI floor” (unreimbursed employee expenses, tax preparation fees, investment advisory fees) remains suspended through 2025 under the TCJA and its OBBB extension.

Line 17: Total Itemized Deductions

Add lines 4, 7, 10, 14, 15, and 16. This total flows to Form 1040, Line 12.

Compare this total to your standard deduction. Use whichever is larger.

Standard Deduction vs. Itemizing: Decision Framework

Consider itemizing if you have:

High SALT payments — If your combined state income/sales tax and property taxes approach or exceed ~$15,000 (single) or ~$20,000 (MFJ), the new $40K cap makes itemizing more attractive
Mortgage interest — Particularly in the early years of a mortgage when interest payments are highest
Large medical bills — Unreimbursed expenses exceeding 7.5% of AGI
Significant charitable giving — Cash and appreciated securities donated to qualifying organizations
Combination of the above — Even if no single category is large, the total may exceed your standard deduction

For a complete list of deductions to consider, see our tax deductions complete list.

E-Filing Schedule A

All major tax software programs handle Schedule A automatically. When you enter your deductible expenses, the software compares your itemized total to the standard deduction and chooses whichever benefits you more. You can override this choice if needed (for example, if you are MFS and your spouse is itemizing).

Frequently Asked Questions

Can I itemize on my state return but take the standard deduction on my federal return?

In most states, yes. State and federal returns are independent. Some states require you to match your federal choice, so check your state’s rules.

What if my itemized deductions are only slightly more than the standard deduction?

Itemize. Even a $1 advantage means a slightly lower tax bill. There is no minimum margin required.

Does the SALT cap sunset?

Yes. The ~$40,000 SALT cap under the One Big Beautiful Bill has a five-year sunset. If not renewed, the cap would revert to $10,000 (or whatever Congress enacts) after approximately 2030.

Can I deduct property taxes on a second home?

Yes, property taxes on second homes and other real property are deductible on Schedule A. However, they count toward the ~$40,000 SALT cap along with all your other state and local taxes.

What records do I need to keep?

Keep receipts, cancelled checks, and acknowledgment letters for all itemized deductions. The IRS generally has three years to audit a return, but keep records for at least seven years if you claim a loss deduction.

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional or visit irs.gov for official guidance on your specific tax situation.