Changes to Itemized Deductions
July 17, 2025
Many of the tax provisions of the Tax Cuts and Jobs Act (TCJA), passed in 2017, were set to expire on December 31, 2025 – including the changes made to limit itemized deductions for mortgage interest paid on a qualified residence and repeal miscellaneous deductions indefinitely. However, under the newly passed One Big Beautiful Bill Act (OBBBA), this limitation has been updated and extended, effective January 1, 2025.
The table below compares (1) the current law under the TCJA, (2) what the law would have been without the OBBBA and after the TCJA provisions expired, and (3) the new law under the OBBBA.
|
Category |
Current Law (TCJA) |
Post TCJA (No New Law) |
New Law (OBBBA) |
|
Limit on interest deduction for debt securing qualified residence |
For tax years after 2017 and before 2026: Acquisition debt limit of $750,000 ($375,000 for married filing separately) on debt acquired after December 15, 2017, and before January 1, 2026 |
Acquisition debt limitation would have reverted to $1 million ($500,000 for married filing separately) |
Limitations imposed by TCJA made permanent for all debt acquired after December 15, 2017
|
|
Home equity debt interest deduction |
No deduction allowed |
After 2025, interest on home equity debt would have been deductible subject to loan limitation of lesser of: $100,000 ($50,000 for married filing separately); or FMV of the home minus the value of the last acquisition debt secured by the home. |
No deduction allowed – made permanent |
|
Mortgage insurance premiums deduction |
Premiums paid or accrued after December 31, 2017, and before January 1, 2022
Home mortgage insurance premiums attributable to qualified residence are deductible as qualified residence interest Adjusted Gross Income (AGI) Limitation Deduction reduced by 10% for each $1,000 by which taxpayers AGI exceed $100,000 ($500 and $50,000 for married filing separately) |
No deduction would be allowed. |
Deduction for mortgage insurance premiums as qualified residence interest made permanent for all tax years after 2017 AGI Limit removed, as added by TCJA |
|
Miscellaneous Itemized Deductions |
For tax years 2018 to 2025
Not Allowed |
Miscellaneous itemized deductions subject to 2% of AGI limitation would’ve been reinstated as deductible again |
For tax years after 2017 Not Allowed – made permanent
|
|
Educator Expenses |
For tax years 2018 to 2025 Eligible educators may deduct above-the-line expenses in the classroom. Deduction is limited to $300 for 2025. Eligible Educator K-12 teacher, instructor, counselor, principal, or aide in school for at least 900 hours during a school year. Eligible Expenses Expenses paid or incurred for materials used in the classroom. (excluding nonathletic supplies for courses in health or physical education) |
Above the line deduction of $300 would have remained in effect for 2025. Eligible educators would be able to reduce excess expenses in the classroom as a miscellaneous deduction subject to the 2% AGI limitation |
For tax years after 2017 Above-the-line educator expense deduction made permanent. Excess expenses are deductible as a miscellaneous deduction without 2% AGI limitation. Eligible Educator Expanded to likewise include interscholastic sports administrator or coach. Eligible Expenses Expenses paid or incurred for materials used as part of an instructional activity. (including nonathletic supplies for courses in health or physical education) |
|
Phase out of itemized deductions (Pease limitation) |
For tax years 2018 to 2025 The Pease limitation on itemized deduction is temporarily repealed. |
The Pease limitation on itemized deduction would’ve been reinstated. |
For tax years after 2017 The Pease limitation is permanently repealed. New limitation after 2025 Itemized deductions are reduced by 2/37 of the lessor of (1) taxpayer’s itemized deductions or (2) taxpayer’s taxable income more than the dollar amount where 37% tax bracket takes effect. Those not in the 37% tax bracket are not affected by this new limitation. |
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