Will You Be Itemizing Your 2025 Taxes?
Key Changes Under the OBBBA
The One Big Beautiful Bill Act (OBBBA) makes several changes that could impact whether you itemize deductions or take the standard deduction for upcoming tax years.
Here’s what you need to know.
What Counts as Itemized Deductions
If you choose to itemize, the following are the primary categories:
- Home Mortgage Interest – Interest on up to $750,000 of qualified home indebtedness.
- SALT – State and local taxes, including real estate, sales, and/or state income tax.
- Charitable Contributions – Donations to qualifying organizations.
OBBBA Changes to Itemized Deductions
- Home Mortgage Interest – Permanently limits the deduction to interest on the first $750,000 of indebtedness.
- Home Equity / HELOC Interest – Permanently excludes interest on home equity loans and lines of credit from being deductible. SALT Deduction – Increases the limit to $40,000 for taxpayers with adjusted gross income (AGI) under $500,000. The deduction phases down, returning to $10,000 once AGI exceeds $600,000. For additional information on SALT, Click Here
- Charitable Contributions – No changes if you itemize; rules remain the same.
- Vehicle Loan Interest – Allows up to $10,000 per year in deductible interest on qualifying new vehicles. The vehicle must be assembled in the United States.
Other Changes Affecting Deductions
- Senior Deduction – Adds $6,000 to either the standard or itemized deduction for each taxpayer age 65 or older, if income is below $75,000 (single) or $150,000 (married filing jointly). Phases out above these income levels. (Available for four years) More information on the Senior Deduction, Click Here
- Charitable Contributions Without Itemizing – Even if you take the standard deduction, you may deduct up to $1,000 (single) or $2,000 (married filing jointly) in cash charitable contributions, with proper documentation.
- Gambling Losses – Beginning in 2026, gambling losses can only offset up to 90% of gambling winnings (down from 100%).
- Personal Casualty Losses – Now only deductible if the loss results from a federally declared disaster.
- Vehicle Loan Deduction – As noted above, applies for only four years and is limited to qualifying new vehicles.
What This Means for You
With the OBBBA changes, the decision to itemize or take the standard deduction may shift for many taxpayers. Factors such as mortgage interest, charitable giving, and the expanded SALT limit could make itemizing more valuable—while new rules like the senior deduction and above-the-line charitable contributions may benefit those taking the standard deduction.
The Barklee Financial Group team can help you run the numbers, evaluate your options, and develop a strategy that maximizes deductions under current law.
