Get Ready to Revisit Itemized Deductions

With changes taking effect for the 2025 tax year, tax professionals need to re-focus on deductions that were often overlooked after the Tax Cuts & Jobs Act (TCJA). When TCJA was passed, many clients stopped itemizing deductions, and as a result, documents such as mortgage statements and charitable contribution receipts were no longer being regularly requested.

Now is the time to pick that practice back up again.

Increased SALT Deduction Limit

The limit on deductible state and local taxes (SALT), including real estate taxes, has increased to:

• $40,000 for most filers

• $20,000 for Married Filing Separately (MFS)

This increase means many clients who previously took the standard deduction may now benefit from itemizing again, starting with their 2025 tax returns. This shift could result in meaningful tax savings if properly handled.

Key Deductions You Should Not Miss

Although the list is short, these deductions can make a real difference for your clients:

1. State Taxes Paid in 2025

State taxes paid during 2025 can be deducted, regardless of the year the tax balance was originally owed. Timing of payment matters more than the tax period itself.

2. Mortgage Points (Buyer’s Column – HUD-1)

For newly purchased homes, "points" listed in the buyer’s column on the HUD-1 settlement statement — often marked as "origination" or similar — may be deductible.

3. Mortgage Points (Seller’s Column – HUD-1)

Surprisingly, similar points listed in the seller’s column may also qualify as deductions. This is frequently missed but can be valuable.

4. Gambling Losses

Gambling losses are deductible up to the amount of gambling winnings. Proper documentation is essential to support these claims.

Actionable Advice for Tax Professionals

• Resume requesting mortgage statements and charitable contribution records from clients.

• Review prior years where clients did not itemize and reassess eligibility for 2025.

• Educate clients about overlooked deductions that could reduce their tax burden.

• Keep this checklist handy to ensure no valuable deduction slips through the cracks.

Final ThoughtS

A small change in documentation habits can lead to significant tax savings for your clients. As 2025 approaches, staying proactive and detail-oriented will help you deliver better results and stronger value.

Consider keeping this list nearby — it could make a noticeable difference for your clients this tax season.