The IRS's preliminary figures for tax year 2022 show that only 9.5% of returns itemised, while 88.6% took the standard deduction. That is a 2022 figure, not a 2025 estimate, but it shows how often people get the choice wrong or never check it.
This guide covers ten Schedule A categories, how to decide between standard and itemised, and why the new 2025 Schedule 1-A deductions are a separate matter. Dollar amounts are in US dollars because they come from IRS rules.
Key Takeaways
- Itemised deductions are calculated on Schedule A, and the total flows to Form 1040 line 12e.
- Compare your Schedule A total with the standard deduction for your filing status.
- The 2025 SALT cap is $40,000 ($20,000 if married filing separately), reduced for higher incomes.
- Senior, tips, overtime and car-loan-interest deductions sit on Schedule 1-A, not Schedule A.
- Confirm every figure against the 2025 IRS instructions before filing.
Overview of Itemised Deductions on Form 1040 for 2025
A deduction lowers the income you are taxed on. A credit lowers the tax you owe. Itemised deductions are qualifying personal expenses subtracted from adjusted gross income (AGI) to reach taxable income.
Form 1040 is the main return. Schedule A supports the itemised route, and its line 17 total carries to Form 1040 line 12e. Line 18 lets you elect to itemise even when the total is below the standard deduction.
That election matters in one case: a married-filing-separately taxpayer generally cannot take the standard deduction if their spouse itemises.
Standard deduction amounts for 2025
These are the basic amounts from IRS Publication 501, as amended by P.L. 119-21:
| Filing status | 2025 standard deduction |
|---|---|
| Single | $15,750 |
| Married filing separately | $15,750 |
| Married filing jointly | $31,500 |
| Qualifying surviving spouse | $31,500 |
| Head of household | $23,625 |
Taxpayers aged 65 or older, or blind, add $2,000 per condition if unmarried, or $1,600 per condition if married or a qualifying surviving spouse.
Schedule A versus Schedule 1-A
Schedule 1-A is new for 2025 and is separate from Schedule A. Its total flows to Form 1040 line 13b, and you can claim it whether you itemise or not. Mixing the two is one of the most common classification errors this year.
Top 10 Itemised Deductions on the 2025 Form 1040
Think of this as a ranking of commonly relevant Schedule A categories, not a promise that these are the biggest deductions for you. Each entry covers eligibility, limits, reporting and records.
1. Medical and dental expenses
You can deduct unreimbursed medical and dental costs only above 7.5% of AGI. Enter expenses on line 1, AGI on line 2, 7.5% of AGI on line 3, and the excess on line 4.
- Eligible: doctor, dental and hospital services, prescribed medicines and insulin, medical equipment, insurance premiums you pay after tax, and medical travel.
- Not eligible: amounts paid or reimbursed by insurance, an HSA or an HRA, and pre-tax employer-paid premiums.
Keep bills, statements and proof of payment. See IRS Publication 502.
2. State and local income or sales taxes
Choose state and local income taxes or general sales taxes. Never both. Line 5a can include withholding, 2025 estimated payments, and prior-year state tax paid during 2025.
A taxable refund of previously deducted state tax is reported separately on Schedule 1. It is not netted against this year's payments. Keep state tax records or your sales-tax calculation.
3. Real estate taxes
Qualifying real estate tax is imposed uniformly for a general public purpose and reported on line 5b.
- Assessments for improvements that raise property value are not deductible.
- Escrow deposits count only once the lender pays the taxing authority.
- On a sale, buyer and seller split the tax by ownership period.
- Foreign real estate taxes are not deductible on Schedule A.
Use your lender's year-end statement and the property tax bill as support.
4. Personal property taxes
The tax must be imposed annually and based on the property's value alone. For vehicles, only the value-based part of the registration charge qualifies. Flat, weight-based or similar fees do not. Report it on line 5c and keep the tax bill.
Lines 5a to 5c combine on line 5d, then hit the SALT cap on line 5e. That cap is $40,000 ($20,000 MFS), reduced by 30% of MAGI above $500,000 ($250,000 MFS), but never below $10,000 ($5,000 MFS). Real estate taxes in category 3 count toward the same cap.
5. Home mortgage interest
For acquisition debt taken on after 15 December 2017, the debt limit is $750,000 ($375,000 MFS). Home-equity interest qualifies only if the proceeds bought, built or substantially improved the home securing the loan.
- Form 1098 generally reports interest and may report qualifying points.
- Purchase points may be deductible when paid. Refinancing points are generally amortised over the loan term.
- Mortgage insurance premiums are not deductible for 2025.
Complex situations, such as multiple homes, are covered in IRS Publication 936.
6. Charitable cash contributions
Gifts to qualifying organisations are generally capped at 60% of AGI for cash. Payments that give you a personal benefit, gifts to individuals and political contributions do not count.
- Any cash gift needs a bank record or charity receipt.
- Gifts of $250 or more need a contemporaneous written acknowledgment.
7. Noncash charitable contributions
Donated clothing, household goods, securities and vehicles are valued at fair market value, not what you paid. Long-term capital-gain property is generally limited to 30% of AGI for 50%-limit organisations.
- Form 8283 is generally required when noncash gifts exceed $500.
- A qualified appraisal is generally required above $5,000, with exceptions.
Keep receipts and written acknowledgments. IRS Publication 561 explains valuation.
8. Gambling losses
Casual gambling losses are deductible only up to your gambling winnings, and only if you itemise. Winnings are reported separately as income, so losses never create a net deduction. A loss log should show:
- date and type of wager
- location
- people present
- amounts won or lost
Professional gamblers are treated as running a business, and for 2025 their losses and related expenses are still limited to winnings. The 90% loss limitation in P.L. 119-21 applies only from 2026.
9. Casualty and theft losses
Personal-use losses are generally deductible only when caused by a federally declared disaster. The usual calculation subtracts $100 per event, then 10% of AGI, and uses Form 4684.
Qualified-disaster rules can instead use a $500 reduction with no 10%-of-AGI haircut. Ordinary accidents and uninsured everyday losses do not qualify. Keep proof of ownership, before-and-after values, insurance payouts, repair estimates, photographs and the disaster declaration.
10. Investment interest and other itemised deductions
Investment interest on line 9 is generally limited to net investment income. Form 4952 computes it, and disallowed interest carries forward.
Line 16 covers a short list, including:
- gambling losses up to winnings
- casualty losses on income-producing property
- federal estate tax on income in respect of a decedent
- amortisable bond premium
- claim-of-right repayments over $3,000
- impairment-related work expenses of disabled employees
Not deductible: federal income tax, Social Security and Medicare taxes, personal living costs, and ordinary unreimbursed employee expenses.
How We Chose These Deductions
The list favours categories that are broadly relevant, clearly named on Schedule A, and likely to raise real planning questions. We weighed:
- clarity of eligibility
- potential dollar value
- filing-status and income limits
- documentation burden
- how often taxpayers actually use them
- risk of confusion with credits, business deductions or above-the-line adjustments
Mistakes to avoid
- Claiming both the standard and itemised deduction
- Deducting expenses that insurance or an HSA already reimbursed
- Forgetting the SALT cap
- Treating gambling losses as a standalone deduction
- Putting Schedule 1-A items on Schedule A
- Using 2024 or 2026 thresholds for a 2025 return
Check each figure against the 2025 Schedule A instructions before you file.
Conclusion
The best strategy depends on your filing status, income, home ownership, giving, medical costs and investments, not on how many deductions exist. Add up your eligible Schedule A expenses, compare the total with your 2025 standard deduction, and keep your records before you file.
If you are an Australian-based taxpayer, a non-resident or a business owner with US or cross-border questions, VJM Global's US-compliant tax professionals can review your situation. The firm prepares Form 1040 returns and quotes fees by scope of work.
Frequently Asked Questions
What deductions are available on Form 1040?
You can take the standard deduction or itemise on Schedule A. Above-the-line adjustments sit on Schedule 1, and 2025 adds Schedule 1-A deductions that apply either way.
What are the standard deductions for the 1040 tax form?
For 2025 they range from $15,750 for single filers to $31,500 for joint filers, with $23,625 for head of household. Age 65+ or blindness adds more.
What is the new $6,000 standard deduction for seniors?
It is an additional deduction of up to $6,000 per eligible person aged 65 or older, not a change to the standard deduction. It phases out above $75,000 MAGI ($150,000 joint), requires joint filing for married couples, and is claimed on Schedule 1-A.
Who needs to complete Schedule A and when should you use it?
Use it when your eligible itemised deductions exceed your standard deduction. You may also itemise if your spouse does and you file separately.
What is Schedule A on a Form 1040?
It is the form that totals your itemised deductions. Line 17 carries to Form 1040 line 12e.
Can I deduct gambling losses on my taxes?
Only if you itemise, report the winnings as income, and keep a reliable log. The deduction cannot exceed your winnings.
