Schedule A — Itemized Deductions
Schedule A is used to report itemized deductions on Form 1040. Taxpayers itemize when their total deductions exceed the standard deduction ($15,000 single / $30,000 MFJ for 2026 under OBBBA). Key deductions include: medical expenses (above 7.5% AGI floor), state and local taxes (SALT, capped at $10,000), mortgage interest, charitable contributions, and casualty losses from federally declared disasters. For tax professionals, Schedule A planning — particularly SALT cap workarounds, bunching strategies, and charitable giving optimization — is a high-value advisory service.
Key Rules and Authority
| Rule | Detail |
|---|---|
| Standard Deduction (MFJ) | $30,000 |
| Standard Deduction (Single) | $15,000 |
| SALT Cap | $10,000 |
| Medical Expense Floor | 7.5% of AGI |
| Mortgage Interest Limit | $750,000 acquisition debt |
| Charitable Cash Limit | 60% of AGI |
Itemizing vs. Standard Deduction — When It Makes Sense
Under OBBBA, the standard deduction for 2026 is $30,000 (MFJ), $15,000 (single), and $22,500 (head of household). Taxpayers should itemize only when their total Schedule A deductions exceed the applicable standard deduction. With the SALT cap at $10,000 and mortgage interest limited to the first $750,000 of acquisition debt, many middle-income taxpayers no longer benefit from itemizing. The primary candidates for itemizing are: (1) high-income taxpayers with large charitable contributions; (2) taxpayers with significant medical expenses above the 7.5% AGI floor; and (3) taxpayers in high-tax states who own expensive homes.
SALT Cap Workarounds — Pass-Through Entity Tax (PTET)
The $10,000 SALT cap applies to individuals but not to businesses. The Pass-Through Entity Tax (PTET) — available in most states — allows S-Corps and partnerships to pay state income tax at the entity level, which is deductible as a business expense on the federal return without being subject to the SALT cap. The individual owners receive a state tax credit for the PTET paid. This effectively converts a non-deductible personal SALT deduction into a fully deductible business expense, saving federal tax at the owner's marginal rate on the excess state taxes above $10,000.
Frequently Asked Questions
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