Definition
Listing specific deductible expenses on your return, mainly mortgage interest, state and local taxes, charitable gifts, and large medical costs, instead of taking the flat standard deduction. You take whichever is larger; only the amount above the standard deduction produces extra tax savings.
Why it matters
Since the standard deduction roughly doubled in 2018, most filers no longer itemize, which changes old advice: mortgage interest and donations only cut taxes once total itemized deductions beat the flat amount. Bunching two years of donations into one is a common response.
Example
A couple tallies $14,000 of mortgage interest, $10,000 of state and property taxes, and $4,000 of donations: $28,000 itemized. Only the amount above what the standard deduction would have given them saves tax at their marginal rate. Their renting neighbors take the flat deduction and skip every receipt.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.