Standard vs. Itemized Deductions

Every taxpayer can choose between the standard deduction (a fixed amount) or itemizing (listing actual expenses). Most people benefit from the standard deduction, but it depends on your situation.

2025 Standard Deduction Amounts

Additional deduction for age 65+ or blind: +$2,000 (Single/HoH) or +$1,600 per spouse (MFJ/MFS) per qualifying condition.

Common Itemized Deductions

If you itemize (Schedule A), you can deduct:

• State and local taxes (SALT): Income tax, property tax, and sales tax, capped at $40,000 total for 2025 ($20,000 if MFS), rising to $40,400 for 2026 under OBBBA, phased down for high earners; see our SALT cap guide
• Mortgage interest: On up to $750,000 of mortgage debt ($375,000 if MFS)
• Charitable donations: Cash gifts up to 60% of AGI; appreciated assets up to 30% of AGI
• Medical expenses: Amount exceeding 7.5% of AGI
• Casualty losses: From federally declared disasters only

The SALT Cap

The 2017 Tax Cuts and Jobs Act capped the state and local tax (SALT) deduction at $10,000 from 2018-2024. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, raised that cap to $40,000 for 2025, rising to $40,400 for 2026, though it phases down for filers with MAGI above $500,000 ($505,000 for 2026) and is scheduled to revert to $10,000 in 2030. See our SALT cap guide for the full breakdown.

Under the pre-OBBBA $10,000 cap, someone paying $15,000 in state income tax and $12,000 in property tax could deduct only $10,000 of the $27,000 they actually paid. Under the 2025-2026 cap, that same $27,000 is fully deductible, since it's well under the $40,000/$40,400 limit.

When to Itemize

Itemize when your total deductible expenses exceed the standard deduction. Common scenarios:

• High mortgage interest (especially in the first years of a mortgage)
• Large charitable donations
• Significant medical expenses (major surgery, chronic illness)
• Combination of SALT cap + mortgage interest + charity exceeds standard deduction

When the Standard Deduction Wins

The standard deduction is almost always better if you:

• Rent (no mortgage interest)
• Live in a low-tax state
• Don't make large charitable gifts
• Are age 65+ (additional standard deduction makes it even harder to beat)

Since the standard deduction was nearly doubled in 2018, roughly 87% of taxpayers now take it instead of itemizing.

Key Takeaways

• Most taxpayers benefit from the standard deduction, it's larger and simpler
• Itemize only if your total deductible expenses exceed the standard deduction
• The SALT cap ($40,000 in 2025, $40,400 in 2026, phased down for high earners) still limits the benefit of itemizing for the highest earners in high-tax states
• Mortgage interest, charity, and medical expenses are the main drivers of itemizing
• You can switch between standard and itemized each year, it's not permanent