Tax Deductions 2026: Complete List of What You Can Deduct

Why Most Taxpayers Should Not Itemize (But Should Know How)

Before cataloging every available deduction, the strategic foundation must be clear: a deduction only helps you if it exceeds the standard deduction. The Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction and capped the SALT deduction at $10,000, causing the share of itemizers to collapse from roughly 30% of filers to approximately 9–11%, per IRS Statistics of Income data.

The math is straightforward: if your mortgage interest, state taxes, charitable contributions, and medical expenses combined are less than $16,100 (single) or $32,200 (married), you take the standard deduction. No receipts, no Schedule A, no hassle — and you get more money off your taxable income.

However, two groups of taxpayers should itemize in 2026. First, those with large mortgage balances in high-rate environments (a $700,000 mortgage at 7% generates $49,000 in interest — well above any standard deduction). Second, high-tax-state residents who can now leverage the dramatically expanded SALT deduction. The OBBBA's SALT increase could pull millions of itemizers back into the itemized calculation, particularly in New York, New Jersey, and California.

2026 Standard Deduction: Starting Point for Every Filer

The standard deduction is the floor — the minimum reduction to taxable income every filer receives without needing to document a single expense. For 2026, the amounts are:

Taxpayers age 65 or older (or blind) receive an additional standard deduction on top of these amounts. For 2026, the add-on is approximately $1,600 per qualifying condition for married filers and $2,000 for single or head-of-household. A married couple where both spouses are 65+ receives an additional $3,200 on top of the $32,200 base — a combined $35,400 standard deduction before a single receipt is filed.

The OBBBA Overhaul: What Changed for Deductions in 2026

The One Big Beautiful Bill Act, signed into law on July 4, 2025, made the most significant changes to the deduction landscape since the 2017 TCJA. Every taxpayer should understand these changes before filing.

Itemized Deductions: The Complete 2026 Breakdown

Itemized deductions are reported on Schedule A (Form 1040) and replace the standard deduction if their total exceeds it. The major categories:

State and Local Taxes (SALT)

The SALT deduction covers state and local income taxes (or sales taxes, if you elect that method) plus property taxes. The 2026 cap is $40,400 for single filers and married filing jointly (or $20,200 for married filing separately). The cap phases out for MAGI above $500,000 at a rate of $0.30 per $1 of excess income — but never falls below $10,000.

This is the largest deduction change in years. Before 2018, taxpayers in high-tax states regularly claimed $20,000–$50,000+ in SALT deductions. The $10,000 cap gutted those deductions for 8 years. Now, a family in New York or New Jersey paying $30,000 in state income taxes and $15,000 in property taxes can deduct the full $40,400 limit — worth roughly $14,000 in federal tax savings at the 37% bracket.

According to the Bipartisan Policy Center's analysis of the OBBBA, the expanded SALT deduction is estimated to primarily benefit households earning $200,000–$500,000 in high-tax states, which is why the income phase-out begins at $500,000 MAGI.

Mortgage Interest Deduction

Mortgage interest on acquisition debt of up to $750,000 ($375,000 married filing separately) is deductible for loans originated after December 15, 2017. Loans before that date remain grandfathered at the old $1 million limit. Home equity loan interest is deductible only if the proceeds were used to buy, build, or substantially improve the home.

The OBBBA reintroduced the PMI deduction — private mortgage insurance premiums are now deductible as home mortgage interest. Homeowners with less than 20% equity who pay PMI (typically $100–$300/month) can add this to their itemized deductions starting in tax year 2026. Per IRS Publication 936, Form 1098 from your lender shows both mortgage interest and reportable PMI paid.

Charitable Contributions

Cash donations to qualifying 501(c)(3) organizations are deductible up to 60% of AGI (made permanent by OBBBA). Non-cash donations of appreciated property (securities, real estate) are generally capped at 30% of AGI. Donations of capital gain property to private foundations are limited to 20% of AGI. Excess contributions carry forward for up to five years.

The OBBBA introduced two new limitations: a 0.5% AGI floor (the first 0.5% of your AGI in charitable contributions provides no deduction) and a benefit cap for the top bracket that effectively limits the tax value of charitable deductions to 35% rather than 37%. These changes primarily affect high-income donors and add modest complexity to the calculation. For most donors below the 37% bracket, nothing changes.

Donations of $250 or more require a written acknowledgment from the charity per IRS Publication 526. Non-cash donations over $500 require Form 8283; over $5,000 for most property requires a qualified appraisal.

Medical and Dental Expenses

Only unreimbursed medical expenses that exceed 7.5% of your AGI are deductible on Schedule A per IRS Publication 502. At $80,000 AGI, you only deduct medical costs above $6,000. This high threshold means the deduction is primarily useful in years with catastrophic medical expenses — major surgery, long-term care, or disability equipment. Health insurance premiums paid with pre-tax payroll deductions are not deductible because they are already excluded from income.

Above-the-Line Deductions: Available Whether You Itemize or Not

Above-the-line deductions (also called adjustments to income) are reported on Schedule 1 of Form 1040 and reduce your Adjusted Gross Income before the standard or itemized deduction is applied. This makes them double-valuable: they lower both your tax bill and your AGI, which in turn affects eligibility for various credits and deductions. These are available to every taxpayer regardless of whether you itemize.

Health Savings Account (HSA) Contributions

If you are enrolled in a qualifying High-Deductible Health Plan (HDHP), contributions to a Health Savings Account are fully deductible above the line. The 2026 limits, per IRS Notice 2026-05, are:

• Self-only HDHP: $4,400 annual contribution limit
• Family HDHP: $8,750 annual contribution limit
• Age 55+ catch-up: Additional $1,000 per year

HSA contributions offer a triple tax advantage: the deduction reduces taxable income, growth inside the account is tax-free, and withdrawals for qualified medical expenses are tax-free. Money not used for healthcare can remain invested and withdrawn in retirement. For more on maximizing this benefit, see our HSA tax benefits guide.

Traditional IRA Contributions

Contributions to a Traditional IRA are deductible above the line, subject to income limits if you (or your spouse) participate in a workplace retirement plan. The 2026 contribution limit is $7,500, with an additional catch-up for those 50 and older of approximately $1,100 (inflation-adjusted under SECURE 2.0 rules, up from a flat $1,000).

Deductibility phase-outs for active plan participants: single filers $79,000–$89,000 MAGI; married filing jointly $126,000–$146,000. If you are not covered by a workplace plan but your spouse is, the phase-out runs $236,000–$246,000. Contributions to a non-deductible Traditional IRA are never deductible, but the earnings still grow tax-deferred — see our backdoor Roth IRA guide for the strategy high earners use in this situation.

Student Loan Interest

Up to $2,500 of student loan interest paid is deductible above the line per IRS Topic 456. This applies to interest on qualified student loans for higher education expenses for you, your spouse, or a dependent. The deduction phases out at $85,000–$100,000 MAGI (single) and $175,000–$205,000 (married filing jointly). Above those upper limits, no deduction is available. Your loan servicer reports interest paid on Form 1098-E.

Self-Employed Health Insurance

Self-employed individuals, sole proprietors, partners, and S-corp shareholders owning more than 2% of the company can deduct 100% of health, dental, and long-term care insurance premiums paid for themselves, spouses, and dependents. This deduction is above the line and reduces AGI — a major advantage over employees whose premiums must exceed 7.5% of AGI before generating any deduction. The deduction cannot exceed your net self-employment income from the business for which coverage was established.

Other Above-the-Line Deductions

• Educator expenses: K-12 teachers and educators can deduct up to $300 ($600 if both spouses are educators and filing jointly) for unreimbursed classroom supplies.
• Early withdrawal penalties: Penalties paid on early withdrawal of savings (CDs, money markets) are fully deductible above the line.
• Half of self-employment tax: The employer-equivalent half of your SE tax (roughly 7.65% of net earnings) is deductible to reduce the inequity between self-employed and employed workers.
• SEP-IRA / SIMPLE / Solo 401(k) contributions: Contributions by self-employed individuals to retirement plans are deductible — SEP-IRA allows up to 25% of net SE income (maximum approximately $70,000 in 2026), which is often the largest available deduction for high-earning sole proprietors.
• Alimony (pre-2019 divorce agreements only): Alimony paid under divorce agreements finalized before January 1, 2019 remains deductible for the payer and taxable for the recipient.

Business Deductions: The QBI Deduction and Beyond

Section 199A Qualified Business Income (QBI) Deduction

The QBI deduction allows eligible pass-through business owners — sole proprietors, S-corp shareholders, partners, and LLC members — to deduct up to 20% of qualified business income. The OBBBA made this deduction permanent, removing the prior December 31, 2025 sunset date.

For 2026, taxpayers with taxable income below approximately $203,000 (single) or $406,000 (married filing jointly) receive the full 20% deduction with no additional restrictions. Above those thresholds, W-2 wage limitations and UBIA of property limitations phase in, and Specified Service Trades or Businesses (SSTBs — law, accounting, consulting, financial services, healthcare) are completely phased out above $247,300 (single) / $495,600 (joint). Report QBI on Form 8995 (simple) or Form 8995-A (complex/phaseout calculations).

Starting 2026, there is also a new minimum QBI deduction of $400 for taxpayers with QBI over $1,000, indexed to inflation. This codifies a floor benefit for micro-businesses.

Section 179 and Bonus Depreciation

Small businesses can immediately expense equipment and business property under Section 179 up to approximately $1,250,000 in 2026, phasing out above $3,130,000 of total property placed in service. Bonus depreciation under Section 168(k) was restored to 100% under the OBBBA for property placed in service from 2025 forward — allowing businesses to immediately deduct the full cost of qualifying assets, no matter how expensive.

These provisions are transformative for capital-intensive small businesses. A construction company that buys $400,000 of equipment can deduct the entire amount in year one rather than depreciating it over 5–7 years. Use our business tax calculator to model the first-year deduction impact.

How to Decide: Standard Deduction vs. Itemizing

The decision is purely arithmetic. Add up your potential itemized deductions: mortgage interest + SALT (up to $40,400 cap) + charitable contributions (after the 0.5% AGI floor) + unreimbursed medical costs above 7.5% AGI + any other qualifying expenses. If the total exceeds your standard deduction amount, itemize. Otherwise, take the standard deduction.

The breakeven analysis becomes interesting in 2026 because the SALT cap change creates new itemizers. A married couple in New Jersey with $35,000 in SALT, $18,000 in mortgage interest, and $5,000 in charitable contributions has $58,000 in potential deductions — far above the $32,200 standard deduction. That same couple in 2025 with the $10,000 SALT cap would have had only $33,000 in deductions, barely above the standard amount.

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