Your client's 2025 AGI is $120,000, she paid $18,000 in property tax plus $9,000 in state income tax, gave $8,000 cash to her church, and had $14,000 in unreimbursed medical bills after a hip replacement. Standard deduction is $15,750. Itemizing wins, but the medical floor and the charitable AGI ceilings each shave the gross number (her $27,000 of state and local taxes stays under the $40,000 state and local tax (SALT) cap). This lesson maps Schedule A.
Deduct unreimbursed qualified medical expenses on Schedule A Line 1 to the extent total exceeds 7.5% of AGI. The floor is the trap. AGI $80,000 means the first $6,000 of medical is non-deductible.
Qualified expenses cover diagnosis, cure, mitigation, treatment, or prevention of disease, and treatments affecting any structure or function of the body (IRC §213(d)). Concrete categories:
- Premiums for medical, dental, vision, qualified long-term care insurance, and Medicare Part B, C, and D (Part A only if voluntarily enrolled).
- Prescription drugs and insulin. Over-the-counter drugs do not qualify (except insulin); over-the-counter (OTC) items can be health savings account (HSA)-reimbursable but not Schedule A deductible
Common mistakes
- Forgetting the 7.5% medical floor, treating it as 10% (the pre-2017 threshold). For AGI $100,000, the floor is $7,500, not $10,000
- Double-counting HSA medical: expenses paid from HSA distributions cannot also appear on Schedule A. Net them out first
- Deducting full SALT above the cap, especially on high-property-tax states. Real estate $28,000 + state income $18,000 still caps at $40,000, not $46,000 (below $500,000 modified adjusted gross income (MAGI), before any phase-down)
Bottom line
- Medical floor: deduct unreimbursed medical expenses only above 7.5% of AGI; 2025 medical mileage is $0.21 per mile; includes premiums, prescriptions, and qualified LTC up to the age-band cap
- SALT cap: state and local income (or sales) plus real estate plus personal property tax, capped at $40,000 ($20,000 MFS), phasing down to a $10,000 floor above $500,000 MAGI; pick income OR sales tax, never both
- Mortgage interest: acquisition-debt cap $750,000 for loans after 12/15/2017 ($1M grandfathered); home-equity interest deductible only if proceeds buy, build, or substantially improve the home
- Investment interest: capped at net investment income with an indefinite carryforward; electing to include qualified dividends and LTCG forfeits their preferential rates
Exam shortcut
Mileage triplet: business $0.70, medical $0.21, charitable $0.14 (charitable is statutory and never inflates). Memorize all three; they appear in deduction problems Charity ceiling ladder: 60-50-30-20. Cash to public = 60. Ordinary-income or LTCG-elected-to-basis = 50. LTCG at FMV to public, or cash to private = 30. LTCG to private = 20 SALT screen: if state income + property tax exceeds $40,000, stop adding. The cap moots everything above it.
The full lesson (about 3,162 words, 21 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
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