Is There a Limit to Itemized Deductions? SALT, Mortgage, Charity

For most taxpayers, there is no single dollar cap on the total amount of itemized deductions you can claim. The real limits sit inside each category. State and local taxes, mortgage interest, charitable gifts, medical expenses, and casualty losses each carry their own ceiling, floor, or percentage rule, and the One Big Beautiful Bill Act (OBBBA) signed in 2025 layered a modest overall haircut on top for filers in the highest income tax bracket. The practical limit on itemized deductions is the sum of these individual restrictions, not a grand total.

When Itemizing Beats the Standard Deduction

Itemizing only pays off when your qualifying expenses, after every category limit below, exceed the standard deduction for your filing status. For 2026 those amounts are:¹

Single or married filing separately: $16,100
Married filing jointly: $32,200
Head of household: $24,150

The OBBBA made the higher standard deduction permanent, and roughly 90 percent of filers take it. Run your numbers through the category rules below before deciding, because those rules often shrink the deductible amount well below what you actually spent.

The Overall Limitation for Top-Bracket Filers

The old Pease limitation, which used to shave three cents off deductions for every dollar of income above a threshold, was suspended by the Tax Cuts and Jobs Act and permanently repealed by the OBBBA. In its place, a rewritten Section 68 caps the tax benefit of itemized deductions at 35 cents on the dollar for taxpayers whose income reaches the 37 percent bracket.² In practice, that disallows about 5.4 percent of otherwise-allowable deductions for top-bracket filers, far milder than Pease, which could wipe out up to 80 percent of deductions at the top.³

If your taxable income stays below the 37 percent bracket, this overall limit does not touch you. Everything else you feel comes from the category caps.

State and Local Tax Cap

The SALT cap bundles state and local income taxes (or sales taxes, if you elect them), real property taxes, and personal property taxes into one bucket. The OBBBA raised the cap sharply from the previous $10,000. For 2026, the maximum SALT deduction is $40,400 for most filers and $20,200 for married individuals filing separately, indexed for inflation through 2029.¹

High earners lose the benefit of the higher cap. Once modified AGI passes roughly $505,000 for joint filers ($252,500 for married filing separately), the cap phases down by 30 cents for every dollar of income above that threshold. The floor is $10,000 ($5,000 for married filing separately), so very high-income filers end up right back at the old limit.³

Business owners in S corporations or partnerships may sidestep the SALT cap entirely through a pass-through entity tax election. When the state imposes an income tax directly on the entity and the entity pays it, the payment is a business deduction at the entity level and never appears on the owner’s Schedule A. The IRS confirmed this treatment in Notice 2020-75, and most states now offer the election.⁴

Mortgage Interest Ceiling

For any mortgage taken out after December 15, 2017, deductible interest is capped by a $750,000 loan-balance limit ($375,000 if married filing separately). Older mortgages originated on or before that date keep the previous $1 million limit ($500,000 if married filing separately). The OBBBA made these numbers permanent.⁵

The cap applies to the loan balance, not the interest paid. A borrower with a $1 million mortgage taken out in 2023 can deduct only 75 percent of the annual interest, the ratio of the $750,000 limit to the actual balance. The remaining 25 percent is nondeductible personal interest. You can include one second home in the calculation, but the $750,000 ceiling applies to the combined debt on both properties.⁶ Home equity debt used for personal purposes such as debt consolidation or vacations produces no deductible interest.

Charitable Contribution Caps

Charitable deductions are capped as a percentage of AGI, and the ceiling depends on what you give and to whom:⁷

Cash to public charities: up to 60% of AGI (made permanent by the OBBBA)
Appreciated property to public charities: up to 30% of AGI
Gifts to certain private foundations: up to 20% of AGI

Amounts above the cap carry forward for up to five additional tax years.

Starting in 2026, the OBBBA also adds a 0.5 percent AGI floor. Only the portion of your charitable giving that exceeds 0.5 percent of AGI is deductible.² With $200,000 of AGI and a $3,000 donation, the first $1,000 is absorbed by the floor and only $2,000 becomes deductible. Large donors barely feel this; modest givers can lose the deduction entirely.

If you’re 70½ or older with a traditional IRA, a qualified charitable distribution routes money directly from the IRA to a charity, skipping both the AGI percentage caps and the new 0.5 percent floor. The transfer is excluded from gross income and counts toward your required minimum distribution. The 2026 QCD maximum is $111,000 per person.⁸

Medical Expense Floor

Medical expenses work as a floor rather than a cap. Only the portion of qualifying costs that exceeds 7.5 percent of AGI is deductible.⁹ With $80,000 of AGI, the first $6,000 in medical spending produces no deduction; only what you pay above that line reaches Schedule A.

Eligible costs include payments to doctors, dentists, and other practitioners, prescription drugs, insulin, health insurance premiums paid with after-tax dollars, and long-term care insurance premiums up to age-based annual limits. Wellness spending such as gym memberships and vitamins does not qualify, and only net costs count after insurance reimbursements.

Casualty and Gambling Loss Restrictions

Personal casualty and theft losses are deductible only when they result from a federally or state-declared disaster. Each loss is reduced by $500, and the total is then reduced by 10 percent of AGI before any of it becomes deductible.¹⁰ A tree falling on your roof during an ordinary storm doesn’t qualify.

Gambling losses have always been capped at the amount of gambling winnings you report. Starting in 2026, the OBBBA tightens this further by limiting the deduction to 90 percent of losses, even when your losses match or exceed your winnings. Someone who wins $10,000 and loses $10,000 can deduct only $9,000 and owes tax on the remaining $1,000 of net winnings.

Deductions That No Longer Exist

If you’re looking to itemize unreimbursed employee expenses, tax preparation fees, investment advisory fees, union dues, or job search costs, none of these are available. The TCJA suspended miscellaneous itemized deductions subject to the 2 percent AGI floor beginning in 2018, and the OBBBA made that suspension permanent.¹¹ They cannot be claimed at any amount.

The Alternative Minimum Tax Can Undo Deductions You Claimed

Even after every category limit, the Alternative Minimum Tax can reduce the value of what remains. The AMT runs a parallel calculation that disallows several itemized deductions outright, including the entire SALT deduction. If AMT liability exceeds your regular tax, you pay the higher figure. For 2026, the AMT exemption is $90,100 for single filers and $140,200 for joint filers, with phaseouts beginning at $500,000 and $1,000,000 respectively.¹ Filers with large SALT deductions and significant income are the most likely to trip the AMT, which effectively takes back part of what they deducted on the regular return.

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
2
House Committee on Ways and Means. The One Big Beautiful Bill Section by Section
3
Congress.gov. The Limitation on Itemized Deductions in H.R. 1, the One Big Beautiful Bill Act
4
Internal Revenue Service. Notice 2020-75 – Deductibility of Payments by Partnerships and S Corporations for Certain State and Local Income Taxes
5
Office of the Law Revision Counsel. 26 USC 163 – Interest
6
Internal Revenue Service. Publication 936 – Home Mortgage Interest Deduction
7
Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts
8
Internal Revenue Service. Notice 25-67 – 2026 Amounts Relating to Retirement Plans and IRAs
9
Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses
10
Office of the Law Revision Counsel. 26 USC 165 – Losses
11
Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions