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 $10,000 total ($5,000 if MFS)
• 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 $10,000 SALT Cap

Since the 2017 Tax Cuts and Jobs Act, the state and local tax (SALT) deduction is capped at $10,000. This significantly reduced the benefit of itemizing for taxpayers in high-tax states like California, New York, and New Jersey.

Before the cap, someone paying $15,000 in state income tax and $12,000 in property tax could deduct the full $27,000. Now they can only deduct $10,000 of SALT, regardless of how much they actually paid.

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 $10,000 SALT cap limits the benefit of itemizing for high-tax-state residents
• 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