Line 33: New York Itemized Deductions

Don’t assume your NY itemized deductions are the same number you put on federal Schedule A. They’re not. New York starts with your federal itemized deductions, then makes its own adjustments — some that help you, some that hurt. The biggest difference? That $10,000 federal SALT cap (IRC Section 164) doesn’t apply the same way on your state return. But if your income is above $100,000, New York starts clawing back your deductions through a phaseout that has no federal equivalent. The whole thing gets calculated on Form IT-196.

How NY Itemized Deductions Differ From Federal

New York begins with your federal Schedule A total, then adds back and subtracts specific items. Here are the big ones:

State and local taxes (SALT): Federally, you’re capped at $10,000 for state/local income and property taxes combined. New York doesn’t impose that cap on your state return. However, you can’t deduct NY state/local income taxes on your NY return (that would be circular). You CAN deduct the full amount of your property taxes and any income taxes paid to other states.
Mortgage interest: Generally follows federal rules under IRC Section 163(h), but if your mortgage exceeds $750,000 (or $1 million for pre-12/15/2017 loans), NY and federal treat the excess the same way.
Charitable contributions: NY follows federal limits under IRC Section 170, but the state requires you to add back any charitable deduction for contributions where you received a state tax credit. This catches people who donate to scholarship-granting organizations.
Medical expenses: Same 7.5% AGI floor as federal. No additional NY modifications for most filers.

The net effect is that your NY itemized deductions are often higher than your federal itemized deductions, mostly because the SALT cap doesn’t bite the same way. For a homeowner paying $18,000 in property taxes, the federal deduction is capped at $10,000 — but the NY deduction can include the full $18,000 (minus any state income tax amounts).

The High-Income Phaseout

This is the part that stings. If your NY AGI exceeds $100,000, New York reduces your itemized deductions per NY Tax Law Section 615. The phaseout works in two stages:

AGI between $100,000 and $475,000: You lose 25% of your charitable contributions and certain other deductions. The exact calculation is on Form IT-196, lines 41-52.
AGI between $475,000 and $525,000: An additional reduction kicks in that can eliminate up to 25% more of your remaining deductions.
AGI above $525,000: The maximum reduction applies — you could lose up to 50% of certain itemized deductions.

Not every deduction gets phased out equally. Medical expenses and casualty losses are generally protected from the phaseout. But your charitable gifts, property taxes, and mortgage interest all get reduced. For someone with $600,000 in AGI and $40,000 in itemized deductions, the phaseout could cut $10,000-$15,000 off their deduction. That’s real money — at the 8.82% bracket, roughly $900-$1,300 in extra tax.

Form IT-196: The Required Worksheet

You can’t just write a number on Line 33 and move on. New York requires Form IT-196 (New York Resident, Nonresident, and Part-Year Resident Itemized Deductions) to calculate your state-level itemized deductions. The form walks you through each adjustment: adding back state/local income taxes, removing the SALT cap benefit, applying the high-income phaseout, and arriving at your final number.

Tax software handles IT-196 automatically. But if you’re reviewing a return or doing it by hand, the form is about 60 lines long. It’s not hard — it’s just tedious. The number from IT-196, line 59 (or wherever the current version ends up) transfers to IT-201, Line 33.

When Itemizing Beats the Standard Deduction

Because the NY standard deduction is so low ($8,000 single, $16,050 MFJ), the bar for itemizing is much easier to clear on your state return. Quick examples:

Single filer, $6,000 property tax, $3,000 charity: $9,000 itemized vs. $8,000 standard. Itemize and save $68.50 (at 6.85%).
MFJ, $14,000 property tax, $4,000 charity, $8,000 mortgage interest: $26,000 itemized vs. $16,050 standard. Itemize and save $681.
MFJ, $3,000 total deductions: Take the standard. Easy call.

If you’re a renter with no mortgage and modest charitable giving, the standard deduction usually wins. Homeowners in the suburbs? Almost always better off itemizing on the NY return, even if they took the standard federally.

Common Mistakes

The errors we see most often on Line 33:

Copying federal Schedule A straight to Line 33. Wrong. The numbers are different after NY modifications.
Deducting NY state income tax on the NY return. You can’t. You can only deduct taxes paid to other states and your property taxes.
Ignoring the phaseout. Software usually catches this, but manual filers sometimes skip the IT-196 phaseout section and report a higher number than they’re entitled to.
Not itemizing when they should. People see “standard deduction” checked on their federal return and assume it applies to state too. Always run both calculations for NY.

Your Line 33 amount flows into Line 37 (Taxable Income) as an alternative to the standard deduction on Line 32. Use whichever is larger.

Sources & References

Frequently Asked Questions

Does the federal $10,000 SALT cap apply on the NY return?

Not in the same way. On your NY return, you can’t deduct NY state and local income taxes (because you can’t deduct a state’s own tax on that state’s return). But you can deduct the full amount of your property taxes and income taxes paid to other states, without the $10,000 federal cap. For most homeowners, this means a bigger deduction on the state return.

Do I need to file Form IT-196?

Yes, if you’re itemizing on your IT-201. Form IT-196 is required to calculate your NY-specific itemized deductions. It adjusts your federal Schedule A amounts for New York rules and applies any applicable high-income phaseouts. Tax software generates it automatically.

What happens to my itemized deductions if I earn over $100,000?

New York phases out a portion of your itemized deductions when NY AGI exceeds $100,000. The reduction starts at 25% of certain deductions and can reach up to 50% for filers with AGI above $525,000. Medical expenses and casualty losses are generally exempt from this phaseout. The exact calculation is on Form IT-196.

Can I itemize on NY and take the standard deduction federally?

Absolutely. The two returns are independent. Since the federal standard deduction is $30,000 (MFJ) and the NY standard is only $16,050, there’s a wide range of deduction totals where it makes sense to take the standard federally and itemize for New York. If your deductions total $20,000, for instance, you’d take the standard federally but itemize on the IT-201.

Are charitable contributions treated differently on the NY return?

Mostly the same, with two exceptions. First, if you received a state tax credit in exchange for a charitable donation (common with certain scholarship and conservation programs), you have to add back the credit portion. Second, charitable deductions are subject to the high-income phaseout for filers with AGI over $100,000, which can reduce the benefit by 25-50%.

Need Help With Your IT-201?

NY itemized deductions have traps that federal doesn’t. We’ll make sure you’re claiming every dollar you’re entitled to — and not a dollar more than you should.

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