Tax Planning

Standard Deduction vs. Itemizing: Which Should You Choose?

4 min read

The Choice Every Taxpayer Faces

Every year, you must decide: take the standard deduction — a flat dollar amount the IRS lets you subtract from your taxable income — or itemize your deductions individually. You take whichever is larger. It sounds simple, but getting it wrong can cost you thousands.

Standard Deduction Amounts (2025)

Filing Status	Standard Deduction
Single	$15,000
Married filing jointly	$30,000
Head of household	$22,500
Married filing separately	$15,000
65+ or blind (additional)	$1,550–$2,000

The Tax Cuts and Jobs Act (TCJA) of 2017 roughly doubled the standard deduction, which dramatically reduced the number of taxpayers who benefit from itemizing. Before the TCJA, about 30% of filers itemized. Today, it is closer to 10%. The One Big Beautiful Bill Act (OBBBA) of 2025 made the TCJA standard deduction and individual tax rates permanent, so the doubled amounts are no longer scheduled to sunset. These amounts are indexed for inflation going forward.

What Can You Itemize?

The major itemized deduction categories are:

Mortgage Interest

Interest on up to $750,000 of mortgage debt used to buy, build, or substantially improve your primary or second home. Home equity loan interest only qualifies if the loan was used for home improvement.

State and Local Taxes (SALT)

The SALT cap was raised to $40,000 ($20,000 for married filing separately) by the One Big Beautiful Bill Act of 2025, effective for tax years 2025 through 2029. This includes state income or sales tax plus property taxes combined. The cap phases down for taxpayers with MAGI over $500,000 ($250,000 MFS) but never falls below $10,000. After 2029, the cap reverts to $10,000. For high earners in high-tax states, the SALT cap — even at $40,000 — can still be a binding constraint.

Charitable Contributions

Cash and non-cash donations to qualified 501(c)(3) organizations. Generally limited to 60% of your adjusted gross income for cash gifts and 30% for appreciated securities. Unused amounts carry forward up to five years.

Medical and Dental Expenses

Only the amount exceeding 7.5% of your adjusted gross income (AGI) is deductible. If your AGI is $100,000, your first $7,500 of medical expenses do nothing for your itemized deductions — only expenses above that threshold count.

Casualty and Theft Losses

Only deductible if the loss occurred in a federally declared disaster area.

So Which Should You Choose?

Take the standard deduction if:

Your total itemized deductions fall below the standard deduction amount — which is true for most taxpayers post-TCJA.
You rent your home and do not make large charitable gifts.
You live in a state with no income tax and have modest property taxes.
Your mortgage is small or paid off, and your charitable giving is modest.

Itemize if:

You own a home with a large mortgage and significant interest payments.
You make substantial charitable contributions, especially of appreciated stock.
You have high medical expenses relative to your income.
Your combined state income tax and property tax already hit the SALT cap (currently $40,000 for 2025–2029), and you have mortgage interest or charitable contributions on top of that.

A Smart Strategy: Bunching Deductions

Because the standard deduction is all-or-nothing in a given year, a technique called bunching can help. The idea: concentrate two years' worth of deductible expenses into a single tax year to push you above the standard deduction threshold.

Example

Instead of giving $15,000 to charity each year, give $30,000 every other year. In the giving year, you may itemize and deduct the full $30,000 (subject to AGI limits). In the off year, you take the standard deduction. Over two years, you deduct $30,000 + $30,000 = $60,000 instead of $30,000 + $30,000 = $60,000... wait, that sounds the same. But the standard deduction is $30,000, so in the off year you get $30,000 worth of deduction without giving anything. The real comparison is:

Giving $15,000/year: $15,000 + $15,000 = $30,000 in itemized deductions, but the standard deduction gives you $30,000/year anyway, so the charitable giving effectively provides no tax benefit.
Bunching $30,000 every other year: $30,000 itemized in year 1, $30,000 standard in year 2. Total deductions over two years: $60,000. Without bunching, you would have gotten $30,000 standard + $30,000 standard = $60,000 total deductions, but your charitable giving ($30,000 over two years) was matched by just taking the standard deduction. With bunching, you get the full $60,000 in deductions plus your charitable gifts actually reduce your taxable income.

This works particularly well with a donor-advised fund (DAF) — you front-load the donation to the DAF in the bunching year (getting the full deduction), then recommend grants to charities over multiple years.

Key Takeaway

For most taxpayers, the standard deduction wins — but do not assume. Run the numbers each year, especially if you have a mortgage, high property taxes, or generous charitable habits. And if you are close to the threshold, consider bunching to push yourself over.