Should I Itemize Deductions on Schedule A or Take the Standard Deduction?

For most U.S. taxpayers, the standard deduction is the better choice. For the 2025 tax year, the One Big Beautiful Bill Act (OBBBA) raised the standard deduction to $15,750 for single filers, $23,625 for head of household, and $31,500 for married filing jointly. Unless your combined itemized deductions exceed these amounts, Schedule A will not reduce your tax bill.

However, the same law also quadrupled the SALT deduction cap from $10,000 to $40,000, which means more taxpayers, especially property owners with significant state and local taxes, may benefit from itemizing in 2025 than in recent years. The most common reasons to itemize include:

State and local taxes (SALT) up to $40,000 (new for 2025)
Mortgage interest on up to $750,000 of home loan debt
Unreimbursed medical expenses exceeding 7.5% of adjusted gross income
Charitable donations to qualifying U.S. organizations

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Here’s how to determine whether itemizing makes sense for your situation and why the decision is especially complex for Americans living abroad.

What Changed With the SALT Deduction for 2025?

The biggest Schedule A change for the 2025 tax year is the SALT deduction cap. Since 2018, taxpayers who itemized were limited to deducting just $10,000 in state and local taxes ($5,000 if married filing separately). For many homeowners in higher-tax states or those with foreign property taxes, this cap made the standard deduction more attractive.

For 2025, the OBBBA temporarily raised the SALT cap to $40,000 ($20,000 for married filing separately). This means property owners can now deduct significantly more in state income taxes, local property taxes, and foreign property taxes combined.

Filing Status	Standard Deduction (2025)	SALT Cap (2025)
Single	$15,750	$40,000
Married filing jointly	$31,500	$40,000
Head of household	$23,625	$40,000
Married filing separately	$15,750	$20,000

Take Note: The $40,000 SALT cap phases down for higher earners. If your modified adjusted gross income exceeds $500,000 (married filing jointly), the cap is reduced by 30 cents for every dollar over the threshold. At $600,000 MAGI, the cap reverts to the old $10,000 limit. For expats, remember that income excluded under the Foreign Earned Income Exclusion may be added back when calculating MAGI for certain phaseouts.

The higher SALT cap is temporary. It will increase by 1% each year through 2029, then revert to $10,000 in 2030.

What Can I Deduct on Schedule A?

Schedule A covers five categories of deductions. Here is how each applies to U.S. taxpayers, with notes on expat-specific considerations.

Medical and Dental Expenses

You can deduct unreimbursed medical and dental expenses that exceed 7.5% of your adjusted gross income. This includes foreign healthcare costs such as doctor visits, hospital stays, prescription medications, and health insurance premiums you pay out of pocket (not with pre-tax dollars). For expats without employer-provided health coverage, foreign healthcare costs can add up quickly and often push totals past the 7.5% floor.

State and Local Taxes (SALT)

You can deduct up to $40,000 in state and local taxes. Eligible taxes include state income taxes (or general sales taxes, but not both), U.S. property taxes, and foreign property taxes.

Important: Foreign income taxes cannot be deducted on Schedule A if you are claiming the Foreign Tax Credit on those same taxes. Most expats in higher-tax countries benefit more from the Foreign Tax Credit, which provides a dollar-for-dollar reduction in U.S. taxes owed, rather than a Schedule A deduction that only reduces taxable income.

Mortgage Interest

Interest on mortgage debt up to $750,000 is deductible for loans taken after December 15, 2017. This applies to your primary residence and one additional home, even if both properties are located outside the United States. If you own a home abroad and a home in the U.S. with qualifying mortgages on each, the interest on both may be deductible.

Charitable Contributions

Cash and property donations to qualifying U.S. charities (501(c)(3) organizations) are deductible. Most foreign charities do not qualify for U.S. tax deductions unless they are registered with the IRS. You can verify eligibility using the IRS Tax Exempt Organization Search tool.

Starting in 2026, a new 0.5% AGI floor will apply to charitable deductions under the OBBBA. For 2025, no floor applies.

New for 2025: Taxpayers who do not itemize can now deduct up to $1,000 ($2,000 married filing jointly) in cash charitable contributions on top of the standard deduction. This does not apply to donations of appreciated securities or contributions through donor-advised funds.

Casualty and Theft Losses

Only losses from federally declared disasters are deductible. If you experienced a qualifying disaster, losses exceeding $100 per event (and 10% of AGI in aggregate) may be claimed. Under OBBBA, qualifying losses from disasters declared on or before July 4, 2025, may be claimed as an additional standard deduction rather than as an itemized deduction.

Why Is the Standard Deduction vs. Itemize Decision Harder for Expats?

For Americans living abroad, the itemize-or-not calculation has several layers that domestic filers do not face.

FEIE interaction: If you use the Foreign Earned Income Exclusion to exclude up to $130,000 of income, you cannot deduct expenses directly related to that excluded income on Schedule A. Personal expenses like mortgage interest, charitable contributions, and medical expenses are generally not considered related to excluded income and remain deductible, but the line is not always clear-cut.
Foreign Tax Credit vs. SALT deduction: You cannot claim the Foreign Tax Credit and deduct the same foreign income taxes on Schedule A. The FTC is almost always the better choice for expats paying income taxes to a foreign government, because it reduces your U.S. tax liability dollar for dollar. But foreign property taxes can still go on Schedule A as part of the SALT deduction.
Foreign Housing Exclusion overlap: If you claim the Foreign Housing Exclusion through Form 2555, those housing costs cannot also appear on Schedule A. However, mortgage interest and property taxes on a home you own abroad, paid separately from your housing exclusion calculation, may still be deductible.
Currency conversion: All foreign expenses on Schedule A must be converted to U.S. dollars using IRS-approved exchange rates for the year the expense was incurred. Using incorrect rates is a common audit trigger.

Pro Tip: The interaction between Schedule A, the FEIE, the Foreign Tax Credit, and the Foreign Housing Exclusion requires analyzing your full tax picture before deciding whether to itemize. Choosing the wrong combination can cost thousands of dollars. This is one of the most common reasons expats benefit from working with a tax professional who specializes in international returns.

When Does Itemizing Clearly Make Sense?

The math favors itemizing when your total qualifying deductions exceed the standard deduction for your filing status. With the new $40,000 SALT cap, more scenarios now clear the bar:

Property owners in higher-tax areas: If you pay $15,000+ in combined U.S. and foreign property taxes and have a mortgage, the SALT deduction plus mortgage interest alone may exceed the standard deduction.
Significant medical expenses: If you paid substantial out-of-pocket healthcare costs abroad, especially without employer-provided coverage, the medical expense deduction can push your total past the threshold.
Large charitable donors: Consistent, sizable charitable giving to U.S.-qualified organizations often tips the balance toward itemizing.
Multiple property owners: Owning both a U.S. home and a foreign home with mortgages creates multiple deductible interest and tax payments that frequently exceed the standard deduction.

For many expats with simpler tax situations, particularly those earning under $130,000 with no property or significant medical expenses, the standard deduction remains the right call. Combined with the FEIE, most of these expats owe $0 in U.S. federal taxes regardless of their itemizing decision.

Let Greenback Determine the Right Strategy for You

The standard deduction vs. itemizing decision is just one piece of a broader tax strategy that includes the FEIE, Foreign Tax Credit, Foreign Housing Exclusion, and a range of other deductions and credits available to U.S. taxpayers abroad. Choosing the right combination requires analyzing all of these elements together.

Greenback’s CPAs and Enrolled Agents run the numbers for you. We’ll determine whether itemizing saves you money, ensure your foreign expenses are properly converted and documented, and coordinate Schedule A with the rest of your expat tax return for the best possible outcome.

If you’re ready to be matched with a Greenback accountant, click the get started button below. For general questions on taxes or working with Greenback, contact us, and one of our Customer Champions will happily address all your concerns.

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This article is intended for informational purposes only and does not constitute legal or tax advice. While Greenback makes every effort to ensure the information is accurate and up-to-date, every tax situation is unique. For advice tailored to your specific situation, consult one of our expat tax professionals.