3 Ways To Maximize Your Tax Deduction If You’re Itemizing for 2025
Written by
Dawn Allcot
Edited by
Levi Leidy
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President Donald Trump’s One Big Beautiful Bill Act (OBBBA) raised the state and local tax (SALT) cap deduction to $40,000 from the previous $10,000, as previously reported by GOBankingRates. For homeowners in states with high property taxes, this could raise their allowable deductions past the standard deduction of $15,750 for individual taxpayers and $31,500 for those who are married, filing jointly.
“If your SALT deduction, along with your mortgage interest, medical expenses and charitable donations are greater than the standard deduction, then it is in your best interest to itemize your tax return and use the SALT deduction,” said Tasha Preisner, managing partner at DeMar Consulting Group.
The Tax Cuts and Jobs Act (TCJA) of 2017 removed many itemized deductions Americans used to claim, and the OBBBA made those changes permanent. But there are still ways for middle-class Americans to reduce their tax bills beginning with their 2025 tax returns.
Mortgage Interest
You can deduct mortgage interest paid in 2025 and beyond. You can only deduct interest on up to $750,000 of your mortgage debt, according to the Internal Revenue Service (IRS).
“You normally find this on your 1098 form that you receive from your lending institution. It typically shows up in the mail in January each year or you can download it from your lending institution’s online account,” Preisner explained.
If a tax preparer is helping you file, make sure to bring that paper with you to your appointment or have access to the digital file.
Medical Expenses
Many people didn’t spend enough on healthcare, medical appointments and treatments to exceed the standard deduction under the TCJA. But if your SALT payments push you above the standard deduction, you might want to look closely at your medical expenses, which also include dental and optical costs. However, you can only deduct medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI).
If you think your expenses might be close to 7.5% of your AGI, a tax preparer or do-it-yourself tax software can help you do the calculations. But it’s important to know exactly what you can deduct. Qualified expenses include co-pays, medical bills, insurance premiums, equipment, drugs and medical supplies, according to the IRS.
“This also includes the miles that you drive to your appointments, and it includes expenses for any medical equipment that you may need,” Preisner said.
Deductible costs also include dental care and optical care, including eyeglasses and contact lenses. “One specialty item that taxpayers often don’t think about is a service dog and its expenses,” Preisner added. “If you need a dog for your medical needs, the dog and all the dog’s expenses count for your itemized tax deductions.”
Charitable Donations
Another common deduction more Americans might claim this year are charitable contributions. However, there are some changes to how you’ll write off charitable deductions in 2026 under the OBBBA. Notably, according to USCharitableGiftTrust.org, there’s a 0.5% floor on charitable deductions before the 60% deduction limit kicks in. In other words, if you have an AGI of $100,000, you can make $500 in charitable contributions that wouldn’t count toward the 60% limit. There’s a 30% limit, with a 0.5% floor, for stocks and other appreciable assets.
“The donations must be given to a qualified charity, and you must receive a receipt for that donation,” Preiser explained. “Keep the receipt.”
If you’re donating non-cash goods or service, you’ll need to fill out IRS Form 8283. “That must be signed by a knowledgeable third party at the time of donation for it to be deductible,” she said.
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