Tax Deduction Calculator

Q: Who should itemize in 2026?

You're more likely to benefit from itemizing if you live in a high-tax state (NY, CA, NJ), have a large mortgage, make substantial charitable contributions, or have large medical expenses. The new $40,400 SALT cap under OBBBA makes itemizing viable for more homeowners.

Q: What counts as SALT (state and local taxes)?

SALT includes state income tax (or sales tax), local income tax, and property tax. The 2026 OBBBA cap is $40,400. For high earners above $505,000 MAGI, the deduction is phased down by 30% above $10,000, with a floor of $10,000.

Q: What is the bunching strategy for deductions?

Bunching concentrates 2+ years of charitable donations into one tax year to push itemized deductions above the standard deduction. In the off year, take the standard deduction. Use a Donor-Advised Fund (DAF) to bunch tax deductions while spreading actual giving over time.

Should you itemize or take the standard deduction? Enter your SALT, mortgage interest, charitable donations, and medical expenses to find out. Compare 2026 OBBBA rules and bunching strategies.

Should you itemize or take the standard deduction in 2026?

Filing status

Adjusted Gross Income (AGI)

State & local taxes (SALT)

State income tax + property tax. Capped at $40,400 (OBBBA).

Mortgage interest

Interest on up to $750K loan balance

Charitable donations

Cash donations (60% AGI limit)

Medical expenses

Only amount above 7.5% of AGI is deductible

Other itemized deductions

Casualty losses, gambling losses, etc.

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How to Use This Calculator

Itemize vs Standard tab

The default tab. Enter your filing status, AGI, and SALT (state income tax + property tax). Expand "More options" to add mortgage interest, charitable donations, medical expenses, and other itemized deductions. The calculator instantly compares your total itemized deductions against the 2026 standard deduction and shows which option saves you more in taxes.

Deduction Deep Dive tab

See how each deduction category is capped, phased out, or limited under 2026 OBBBA rules. Enter your full deduction details and the calculator shows the SALT $40,400 cap and phase-down, $750K mortgage limit, charitable AGI limits (60% cash / 30% property), and the 7.5% medical floor — all in one view.

Bunching Strategy tab

Compare three 2-year strategies: standard deduction both years, itemizing both years, or bunching — concentrating 2 years of charitable giving into 1 year to exceed the standard deduction threshold, then taking the standard deduction in the off year. This is especially powerful if your itemized deductions are close to but below the standard deduction.

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The Formula

The decision to itemize or take the standard deduction depends on whether your total itemized deductions exceed the standard deduction for your filing status:

SALT Deduction = min(State + Local Taxes Paid, $40,400)

SALT Phase-Down (if MAGI > $505K):
  Reduction = (SALT - $10,000) × 30%
  SALT Deduction = max($10,000, SALT - Reduction)

Medical Deduction = max(0, Medical Expenses - AGI × 7.5%)

Total Itemized = SALT + Mortgage Interest + Charitable + Medical + Other

Tax Savings = (Itemized - Standard) × Marginal Rate   (if Itemized > Standard)

The key change for 2026: the SALT cap increased from $10,000 to $40,400 under OBBBA. This makes itemizing worthwhile for many more homeowners in high-tax states like New York, California, and New Jersey.

Example

Sarah & Tom — homeowners in Raleigh, NC

AGI: $135,000 (Married Filing Jointly). SALT: $9,800 (NC 4.5% state income tax + property tax). Mortgage interest: $14,200 on a $380K loan. Charitable donations: $4,500. Medical expenses: $3,000.

Itemize vs Standard tab

SALT deduction$9,800

Mortgage interest$14,200

Charitable donations$4,500

Medical (below 7.5% floor)$0

Total itemized$28,500

Standard deduction (MFJ)$32,200

WinnerStandard

Tax savings from standard$814

Sarah & Tom's itemized deductions ($28,500) fall $3,700 short of the $32,200 standard deduction. At their 22% marginal rate, the standard deduction saves them $814 more than itemizing. Their medical expenses ($3,000) don't clear the 7.5% AGI floor ($10,125), so they get no medical deduction.

Bunching Strategy tab

Annual charitable$4,500

Other itemized (SALT + mortgage)$24,000

Year 1: bunch $9,000 charitable$33,000 itemized

Year 2: standard (no charitable)$32,200 standard

2-year total deduction$65,200

vs standard both years ($64,400)$176 saved

By bunching 2 years of charitable ($9,000) into Year 1, Sarah & Tom push their itemized total to $33,000 — above the $32,200 standard. In Year 2 they take the standard. The 2-year total deduction is $65,200 vs $64,400 for standard both years, saving $176 at their 22% rate. A modest but real gain.

FAQ

What is the difference between standard and itemized deductions? ▼

The standard deduction is a fixed amount set by the IRS based on your filing status ($32,200 for MFJ in 2026). Itemized deductions are specific expenses you actually paid — SALT, mortgage interest, charitable donations, and medical costs. You choose whichever is higher. About 87% of filers take the standard deduction because the TCJA (now permanent under OBBBA) roughly doubled it.

Who should itemize in 2026? ▼

You're more likely to benefit from itemizing if you: live in a high-tax state (NY, CA, NJ, CT) and pay significant SALT, have a large mortgage (interest on up to $750K), make substantial charitable contributions, or have large unreimbursed medical expenses. The new $40,400 SALT cap under OBBBA (up from $10,000) makes itemizing viable for more homeowners than under the original TCJA.

What counts as SALT (state and local taxes)? ▼

SALT includes state income tax (or sales tax if you choose), local income tax, and property tax. You can deduct either state income tax OR state sales tax, not both. The 2026 OBBBA cap is $40,400 (up from $10,000 under TCJA). For high earners above $505,000 MAGI, the deduction is phased down by 30% of the amount above $10,000, with a floor of $10,000.

Is mortgage interest still deductible in 2026? ▼

Yes. Mortgage interest on up to $750,000 of acquisition debt is deductible if you itemize. This limit was made permanent under OBBBA (it was originally a temporary TCJA provision). Home equity loan interest is also deductible if the funds are used to buy, build, or substantially improve your home.

What is the bunching strategy for deductions? ▼

Bunching is a tax planning strategy where you concentrate 2 or more years of charitable donations into a single tax year to push your itemized deductions above the standard deduction threshold. In the off year, you take the standard deduction. You can use a Donor-Advised Fund (DAF) to bunch tax deductions while spreading actual charitable giving over multiple years. This works best when your itemized deductions are close to but below the standard deduction.

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