Definition
Itemized deductions are eligible expenses you can deduct from your gross income on Schedule A of your federal return, in place of the standard deduction. Common itemized deductions include mortgage interest, state and local taxes (SALT, up to $40,000 under OBBBA 2026), charitable contributions, and significant medical expenses above 7.5% of AGI.
You itemize when your total qualifying deductions exceed the standard deduction amount for your filing status. This is most common for homeowners with large mortgages, residents of high-tax states, or those with significant charitable giving.
Under OBBBA 2026, the SALT cap was raised from $10,000 to $40,000, making itemizing more valuable for many homeowners in states like California, New York, and New Jersey.
How this affects your W-4
If you itemize and your total deductions exceed the standard deduction, enter the excess in W-4 Step 4b. This reduces your annual withholding dollar-for-dollar for the difference.
For example, if you're a single filer with $35,000 in itemized deductions, your Step 4b entry is $35,000 − $15,000 = $20,000. This tells your employer to withhold less because you'll owe less tax.
See how itemized deductions affects your withholding
Use the free W-4 calculator to calculate your exact withholding with your specific situation.
Open the W-4 Calculator →Related terms
Standard Deduction
A flat dollar amount that reduces your taxable income — most taxpayers take this instead of itemizing.
SALT Deduction
The deduction for state and local taxes paid — capped at $40,000 under OBBBA 2026, up from $10,000.
Deductions Worksheet
The IRS worksheet for calculating the Step 4b entry — used when itemizing deductions on your tax return.