DO YOU FILE SCHEDULE A, if yes read the updates

DO YOU FILE SCHEDULE A? If yes, read the updates:

Filers don't itemize as much as they used to. The number of 1040 forms with Schedule A attached plummeted for post-2017 years, thanks in major part to the Tax Cuts and Jobs Act, which set a $10,000 cap on the Schedule A write-off for state and local taxes and nearly doubled the standard deduction amount. But those that do should know the changes to itemizations in last July's "One Big Beautiful Bill." Some took effect in 2025, impacting 2025 returns that you are filing this year. Others take effect in 2026.

The SALT Cap Increases to $40,000

First, the cap on deducting state and local taxes on Schedule A is $40,000 for 2025 through 2029. This means the higher SALT cap applies to 2025 federal returns that you file this year. After 2029, the cap reverts to $10,000, unless Congress acts. The cap for married couples who file a separate tax return is $20,000 apiece.

There is an income limit. For 2025, the SALT write-off begins to phase out — but not below $10,000 — for filers with modified adjusted gross incomes over $500,000 for joint filers and $250,000 for single and married filing separately. This is a significant change for tax planning purposes, especially for homeowners in high-tax states like Illinois.

Charitable Deduction Threshold Starts in 2026

Second, charitable deductions claimed by itemizers get a bit of a haircut starting with 2026 returns filed next year. The Schedule A charitable write-off is deductible only to the extent that total charitable donations exceed 0.5% of AGI. This is similar to the rules for deducting medical expenses, in which total medicals are deductible only to the extent they exceed 7.5% of AGI. Any excess donations can be carried forward for up to five years.

For example, say your AGI is $232,000. You can only deduct charitable contributions that exceed $1,160 (0.5% of $232,000). If you donated $5,000, your deductible amount would be $3,840. Understanding how this interacts with your overall tax planning strategy is important for maximizing your deductions.

Upper-Income Itemization Reduction

Third, upper-income taxpayers see their total itemizations reduced. Beginning with 2026 returns filed in 2027, itemized deductions are decreased by 2/37 of the lesser of the amount of itemized deductions or the taxable income that exceeds the 37% federal income tax rate bracket. Some tax professionals describe this rule as effectively limiting the tax benefit of itemized deductions to 35%.

What This Means for You

If you are still itemizing, these changes require a fresh look at your tax situation. The higher SALT cap is good news for 2025 returns, but the charitable deduction floor and the upper-income reduction starting in 2026 could reduce your total deductions. Talk to a qualified tax professional to review your situation and plan ahead. Our team at QTA Tax in Oak Brook can help you navigate these changes and find the best strategy for your return.