Filers don’t itemize as much as they used to. The number of 1040 forms with Schedule A attached plummeted for post-2017 years, thanks in major part to the Tax Cuts and Jobs Act, which set a $10,000 cap on the Schedule A write-off for state and local taxes and nearly doubled the standard deduction amount.

But those that do should know the changes to itemizations in last July’s “One Big Beautiful Bill.” Some took effect in 2025, impacting 2025 returns that you are filing this year. Others begin in 2026. We’ll delve into three key changes below.

First, the cap on deducting state and local taxes on Schedule A is $40,000 for 2025 through 2029. This means the higher SALT cap applies to 2025 federal returns that you file this year. After 2029, the cap reverts to $10,000, unless Congress acts. The cap for married couples who file a separate tax return is $20,000 apiece. There is an income limit. For 2025, the SALT write-off begins to phase out… but not below $10,000…for filers with modified adjusted gross incomes over $500,000… $250,000 for couples filing separate returns. The $40,000 cap is reduced by 30% of the excess of the taxpayer’s modified AGI over the $500,000/$250,000 levels. When modified AGI reaches $600,000 or higher, the $10,000 cap then applies. Modified AGI for this purpose is AGI plus any foreign earned income exclusion, foreign housing exclusion and certain income excluded from gross income because it was received from sources in Puerto Rico, American Samoa, Guam or the Northern Mariana Islands. By law, the cap and modified AGI threshold increase 1% each year through 2029. For 2026 returns, filed in 2027, the cap will be $40,400 and the write-off will begin to phase out at modified AGI over $505,000.
Second, charitable deductions claimed by itemizers get a bit of a haircut… Starting with 2026 returns filed next year. The Schedule A charitable write-off is deductible only to the extent that total charitable donations exceed 0.5% of AGI. (This is akin to the rules for deducting medical expenses, in which total medical expenses are deductible only to the extent they exceed 7.5% of AGI.) Any excess donations can be carried forward for up to five years. For example, say your AGI is $232,000 and you donate $14,000 to charity in 2026. If you itemize, you can deduct $12,840 of charitable contributions on your 2026 Form 1040 ($14,000-($232,000 x 0.005)). You would then carry forward the excess $1,160 suspended deduction to 2027. Meanwhile, non-itemizers get a nice tax break for their charitable donations. Beginning with 2026 returns, they can deduct up to $1,000 of charitable cash gifts without having to itemize on Schedule A. The amount is $2,000 for joint filers.
Third, upper-income taxpayers see their total itemizations reduced. Beginning with 2026 returns filed in 2027, itemized deductions are decreased by 2/37 of the lesser of the amount of itemized deductions or the taxable income that exceeds the 37% federal income tax rate bracket. Some tax professionals describe this rule as effectively limiting the tax benefit of itemized deductions to 35%.