New York State itemized deductions are calculated on Form IT-196 by starting with your federal itemized deductions as they would have looked under pre-2018 rules, then applying New York’s own modifications. Three differences drive most of the math: state and local income taxes come out entirely, the mortgage interest limit is the higher pre-TCJA threshold of $1 million, and property taxes have no cap. After the recalculation, New York applies an income-based phase-out that can shrink the benefit substantially for higher earners.
Should You Itemize in New York at All
Compare your potential itemized total against the New York standard deduction first. For the 2025 tax year, the amounts are:1Tax.NY.gov. 2025 Standard Deductions
- Single: $8,000
- Married filing jointly: $16,050
- Head of household: $11,200
- Married filing separately: $8,000
These sit well below the 2026 federal standard deduction of $16,100 single, $32,200 joint, and $24,150 head of household.2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 That gap is the reason many New Yorkers who take the federal standard deduction still itemize on the state return.
One rule about the choice: you cannot itemize in New York if you claimed the federal standard deduction — wait, actually you can. New York permits itemizing on the state return even when you took the federal standard deduction. You can also fall back to the state standard deduction if your NYS itemized total ends up smaller. Spouses filing separate New York returns must both make the same choice.3New York State Senate. New York Tax Law Section 615 – New York Itemized Deduction of a Resident Individual
New York Uses Pre-TCJA Federal Rules
Tax Law Section 615 defines your New York itemized deductions using federal law “as such deductions existed immediately prior to the enactment of Public Law 115-97,” then layers on state-specific modifications.3New York State Senate. New York Tax Law Section 615 – New York Itemized Deduction of a Resident Individual That single sentence drives everything else. Three consequences flow from it:
- The federal SALT cap (originally $10,000, rising to $40,400 for 2026) does not apply to your New York calculation.
- The mortgage interest deduction uses the pre-2018 limit of $1 million in acquisition debt, or $500,000 if married filing separately, rather than the current federal $750,000.4Tax.NY.gov. 2024 Form IT-196-I, Instructions for Form IT-196
- Miscellaneous itemized deductions subject to the 2% of AGI floor — unreimbursed employee business expenses, tax preparation fees, investment advisory costs — remain deductible for New York even though the TCJA eliminated them federally.
Report all of this on Form IT-196, which walks through the recalculation category by category.5Tax.NY.gov. Itemized Deductions (2025)
What You Must Subtract
Section 615(c) removes several items that are deductible federally but not for New York purposes. The big one is state and local income taxes.3New York State Senate. New York Tax Law Section 615 – New York Itemized Deduction of a Resident Individual New York State income tax, New York City income tax, and income taxes paid to any other state or locality all come out. If you elected the general sales tax deduction on your federal return, that comes out too. Every dollar, regardless of the federal cap.
Two narrower subtractions also apply: interest expense on debt used to carry investments that generate income exempt from New York tax, and expenses tied to producing income that New York does not tax.
The point where taxpayers often stumble: the federal SALT line combines property tax and income tax. For New York, split them. Property taxes stay in, uncapped. Income taxes leave entirely. If the federal cap trimmed your combined SALT deduction, your New York property tax deduction may actually exceed what appeared federally.
Category Rules on Form IT-196
Property Taxes
Fully deductible with no dollar limit. A homeowner paying $30,000 in real property taxes deducts the full $30,000 on Form IT-196, no matter what the federal cap did to that number.
Mortgage Interest
Interest on up to $1 million of acquisition debt is deductible for New York ($500,000 married filing separately).4Tax.NY.gov. 2024 Form IT-196-I, Instructions for Form IT-196 The federal limit for mortgages taken out after December 15, 2017 is $750,000.6Internal Revenue Service. Publication 936, Home Mortgage Interest Deduction On a $900,000 mortgage taken out after that date, all of the interest is deductible for New York, while federally only the interest attributable to the first $750,000 counts. The IT-196 instructions include a worksheet for recalculating when the two limits diverge.
Medical and Dental Expenses
New York follows the federal 7.5% of AGI floor.7Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses The threshold is calculated against your New York adjusted gross income (NYAGI) rather than federal AGI, so state addition or subtraction modifications can shift the floor slightly.
Charitable Contributions
Charitable deductions carry over from the federal return with no New York-specific change. The federal AGI percentage limits — generally 60% for cash gifts to public charities, less for other categories — apply the same way.8Internal Revenue Service. Publication 526 (2025), Charitable Contributions
Miscellaneous Deductions Subject to the 2% Floor
Unreimbursed employee business expenses, tax preparation fees, investment advisory fees, and similar costs remain deductible on the state return to the extent they exceed 2% of NYAGI. These lines produce nothing on the federal return, so many taxpayers stopped tracking them after 2018. If the amounts are meaningful for you, start again.
The New York Income-Based Phase-Out
Once you have a total on IT-196, New York applies its own reduction based on NYAGI. This is separate from the old federal Pease limitation and can significantly shrink the benefit at higher incomes. The starting thresholds are:9Tax.NY.gov. 2025 Form IT-196-I, Instructions for Form IT-196
- Single or married filing separately: $100,000
- Head of household: $150,000
- Married filing jointly or qualifying surviving spouse: $200,000
Medical expenses, investment interest, and casualty losses are exempt from the phase-out. The reduction targets property taxes, mortgage interest, charitable contributions, and miscellaneous deductions.
The calculation runs in tiers. Between the starting threshold and $475,000 of NYAGI, a worksheet reduces the deductions subject to limitation by a percentage of the excess over the threshold, capped at 25%. A separate worksheet handles $475,000 to $525,000. Between $525,000 and $1,000,000, 50% of the deductions subject to limitation drop off. Above $1,000,000, a further calculation applies that can eliminate most of the remaining benefit.
A single filer with $250,000 in NYAGI and $40,000 of deductions in the limited categories would sit $150,000 above the threshold. At the ceiling for that tier, the reduction cannot exceed 25% of the $40,000, leaving $30,000 allowed. Medical expenses and investment interest sit on top of that, untouched.
How the 2026 Federal SALT Cap Change Affects You
For tax year 2026, the federal SALT cap rises to $40,400 under the One, Big, Beautiful Bill.10Office of the Law Revision Counsel. 26 USC 164 – Deduction for Taxes The full amount is available at modified AGI at or below $505,000 ($252,500 married filing separately), then phases down but never below $10,000.
The direct effect is on the federal side: more taxpayers will clear the federal standard deduction and itemize federally. That change does not alter your New York calculation. The federal cap has never applied to Form IT-196 and does not now. What it does affect is the practical decision about whether to bother itemizing federally in the first place. Even when the federal answer is still to take the standard deduction, you can itemize in New York as long as your NYS itemized total exceeds the state standard deduction.
Watch Out for Refund Taxability the Following Year
If you deduct state income taxes federally and then receive a New York refund, some or all of that refund may be taxable federal income in the year you receive it under the tax benefit rule.11Internal Revenue Service. Taxable Refunds, Credits or Offsets of State or Local Income Taxes If you took the federal standard deduction, or if the SALT cap prevented you from deducting the full state tax amount, the taxable portion of the refund shrinks or disappears. With the higher 2026 cap, more taxpayers will deduct the full amount they paid, so more refunds will come back as federally taxable the following year.
Records to Keep
Because the state and federal calculations diverge, your records need to support both returns independently.
For property taxes, keep the municipal receipt or mortgage escrow statement showing amount and date paid, and keep property tax figures separate from state income tax figures in your records — they are treated differently on the New York return.
For mortgage interest, the Form 1098 from your lender is the main document. If your mortgage exceeds $750,000, retain the original loan documents showing the amount and date of the loan, since a larger New York deduction may be available under the $1 million pre-TCJA limit.6Internal Revenue Service. Publication 936, Home Mortgage Interest Deduction
For charitable gifts of $250 or more, keep the written acknowledgment from the organization stating the amount and whether you received anything in return.12Internal Revenue Service. Topic No. 506, Charitable Contributions Smaller cash gifts need a bank record or receipt.
For miscellaneous deductions, keep receipts throughout the year. These are gone federally but alive for New York, and reconstructing them at filing time is much harder than logging them as you go. Medical expenses need provider statements showing the service, date, amount billed, and amount you paid after insurance.