Who Should Itemize Deductions Under the Trump Tax Plan

President Trump signed the One Big Beautiful Bill Act into law on July 4, making several changes that affect whether taxpayers should itemize deductions. While the standard deduction remains the simpler choice for many, the law raised the SALT deduction cap to $40,400 in 2026 and added a special rule for pass-through business owners to deduct up to 50% of pass-through entity taxes (PTET) payments. These changes could make itemizing more worthwhile for higher-income households in high-tax states or those with large business-related state tax payments. However, most other filers may still benefit more from claiming the higher standard deduction.

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Key Takeaways:

• The One Big Beautiful Bill Act (OBBBA) temporarily increases the SALT deduction from 2025 through 2029, including a $40,400 cap in 2026, before the limit reverts to $10,000 in 2030.
• The new Trump tax law also raises the standard deduction. Depending on your filing status, the increase ranges from $750 to $1,500.
• The seven Tax Cuts and Jobs Act (TCJA) tax brackets (10% to 37%) become permanent and adjusted for inflation in 2026.

Comparing Standard vs. Itemized Deductions

When you file your taxes, you can either take the standard deduction or itemize deductions—whichever results in lower taxable income. The standard deduction offers a fixed amount based on your filing status, while itemizing lets you deduct certain eligible expenses such as mortgage interest, medical bills and charitable donations.

The TCJA nearly doubled the standard deduction for tax years 2018 through 2025, thereby reducing the need for many taxpayers to itemize deductions. The law also capped or limited several itemized deductions, including the state and local tax (SALT) deduction, mortgage interest and medical expenses, while eliminating others like unreimbursed employee expenses.

Here is a breakdown of seven key deductions that changed with the 2017 Trump tax plan:

These changes led to a sharp drop in the number of taxpayers claiming itemized deductions and reduced the overall tax savings from them. According to the Tax Policy Center, 31% of all individual income tax returns had itemized deductions in 2017. But by 2020, less than two-thirds (only 9%) were still itemizing deductions. ¹

Check out our in-depth study to learn more about how the One Big Beautiful Bill Act (OBBBA) impacts Americans across the country.

Under the TCJA, the 2025 standard deduction was $15,000 for single filers and those married filing separately, $30,000 for joint filers and $22,500 for heads of household. However, the increased standard deductions and other provisions were due to sunset after 2025. The standard deduction would have reverted to it’s pre-2018 levels (adjusted for inflation).

For a comparison, the 2017 standard deduction before the TCJA was $6,350 for singles and couples filing separately, $12,700 for couples filing jointly and $9,350 for heads of household.

However, OBBBA made the standard deduction increases permanent, and boosted the 2025 deduction to $15,750 for single filers and $31,500 for married couples filing jointly.

Here’s how the TCJA standard deduction compares with OBBBA:

Standard Deduction: 2017 vs. 2025 vs. One Big Beautiful Bill Act

What Can You Itemize as a Deduction?

When you itemize deductions, you are listing expenses that will later be subtracted from your adjusted gross income to reduce your taxable income. If your total itemized expenses are higher than your standard deduction, itemizing may result in a lower tax bill.

Not all expenses qualify. The IRS allows certain categories such as:

• Medical and dental expenses (above 7.5% of AGI)
• State and local taxes, including property and sales tax
• Mortgage interest and eligible loan points
• Investment interest expense, subject to net investment income limits
• Charitable contributions, subject to AGI-based limits
• Personal casualty and theft losses attributable to federally declared disasters

These are known as “below-the-line” deductions because they come after calculating adjusted gross income. In contrast, some deductions—like IRA contributions—can be taken “above-the-line” and don’t require itemizing.

Under OBBBA, most existing itemized deduction categories remain unchanged. But, the cap on state and local tax (SALT) deductions is temporarily increased.

How the SALT Deduction Cap Affects Itemized Deductions

The One Big Beautiful Bill Act temporarily raises the SALT deduction limit. Starting in 2025, the cap was increased from $10,000 to $40,000, with annual inflation adjustments through 2029. This makes itemizing more attractive for households in high-tax states through 2029 (especially if state and local tax payments exceed the standard deduction). Under OBBBA, the SALT deduction is worth up to $40,400 ($20,200 for married couples filing separately) in 2026.

However, the benefit phases down by 30% for those with modified adjusted gross income (MAGI) over $505,000 for all taxpayers in 2026, with the exception of married couples filing separately (their phase-down starts at $252,500). Even with the phase-down, the deduction can’t fall below the TCJA’s $10,000 floor.

Additionally, the bill introduces a separate rule for owners of pass-through entities: they can deduct up to the greater of $40,400 or 50% of their PTET liability, after subtracting other SALT payments. This provision increases the likelihood of itemizing for business owners subject to entity-level state taxes.

Who Should Itemize Deductions Under New Tax Law?

Examples of Standard and Itemized Deductions

Let’s review the table below to help you determine when it makes sense to take the standard deduction or itemize with the higher Trump tax plan SALT deduction cap.

When You Should Itemize: TCJA vs. One Big Beautiful Bill Act

Winners and Losers: Itemized Deductions Under OBBBA

Here’s a look at how the temporary increases to the SALT deduction cap will impact different sets of taxpayers:

Bottom Line

Itemizing may still help if your deductions are higher than the standard deduction, which goes up to $16,100 for individuals and $32,200 for joint filers in 2026. The new law raises the SALT cap to $40,400 in 2026, with a 30% phase-down for income over $505,000 ($252,500 for married couples filing separately). The cap won’t go below $10,000, but it will revert to $10,000 in 2030. Business owners may deduct more using a separate PTET formula, which allows the greater of $40,400 or 50% of PTETs, minus other SALT deductions.

Tips to Get You Through Tax Season

• A financial advisor with tax expertise can help you at tax time. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Keeping all of your tax documents organized will help you ace your tax filing. If you choose to itemize, staying organized includes keeping all your receipts. You should keep receipts for at least a few years after you file. It isn’t uncommon for the IRS to also look at returns from three to six years prior to the return they are actually auditing. And depending on which deductions you take, like the home office deduction, your return may be more likely to trigger an audit.
• When you file your taxes, there are quite a few tax filing services to choose from. Two of the most popular, H&R Block and TurboTax both offer a user-friendly design with good explanations of the filing process. Here’s a breakdown to help you decide which service may be better for you.

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