Standard deduction vs. itemizing

Every taxpayer gets a choice: take the standard deduction (a fixed amount based on filing status) or itemize (list out individual deductions like mortgage interest, state taxes, and charitable donations). You pick whichever is larger.

Why almost everyone now takes the standard

The 2017 Tax Cuts and Jobs Act roughly doubled the standard deduction. For 2025, it's around $15,000 single and $30,000 married filing jointly. To beat that with itemized deductions, you need a lot of deductible expenses. Most people don't. Before 2018, about 30% of filers itemized. Now it's around 10%.

When itemizing still wins

• You own a home with significant mortgage interest (especially early in the loan).
• You live in a high-tax state and can deduct up to $10k of state and local taxes (the SALT cap).
• You make large charitable donations.
• You had a catastrophic year of medical expenses exceeding 7.5% of AGI.

The 2025 numbers

Those age add-ons matter more than people realize: a married couple both over 65 gets a standard deduction of $34,700 before any recent senior bonus deductions are counted — a bar that very few retirees' itemizable expenses will ever clear. The blind also get an additional amount. The standard deduction is not one number; it's a number tailored to your situation, and software applies the add-ons automatically.

A worked example: the new homeowner's math

Consider a married couple earning $140,000 who just bought a $400,000 house with a $320,000 mortgage at 6.5%. First-year mortgage interest: about $20,700. Property taxes: $4,800. State income taxes: $6,200 — but the SALT deduction (state and local taxes) caps what they can claim, and property plus income taxes together exceed a $10,000 cap under the old rules (recent law raised the cap substantially for most incomes — check the current year's figure). Say they can claim $11,000 of SALT. Add $3,000 of charitable giving. Total itemized: $34,700 versus the $31,500 standard deduction. Itemizing wins by $3,200, which at their 22% bracket saves about $700 in actual tax.

Now fast-forward eight years. Their mortgage interest has fallen to about $16,000 as the loan amortizes, and the standard deduction has grown with inflation. Suddenly the standard deduction wins again. This is the typical homeowner arc: itemizing wins early in a large mortgage, then the standard deduction quietly retakes the lead. Recheck the comparison every year — good software does it for you automatically, but only if you actually enter your deductions instead of skipping the section.

What you can deduct WITHOUT itemizing

• Traditional 401(k) and IRA contributions, HSA contributions, and self-employed retirement contributions — all reduce income before the standard-vs-itemize choice even happens.
• Student loan interest up to $2,500 (income limits apply).
• Educator expenses up to $300 for teachers.
• Half of self-employment tax, and self-employed health insurance premiums.
• These 'above-the-line' deductions stack ON TOP of the standard deduction — a common misconception is that taking the standard deduction means no deductions at all.

The charitable workarounds worth knowing

Charitable givers who take the standard deduction have two legitimate ways to keep a tax benefit. The first is the donor-advised fund: contribute several years of giving in one lump (say $30,000), itemize that year and deduct the whole amount, then distribute grants to your charities gradually over the following years while taking the standard deduction. The money is invested and grows tax-free in between. The second is for anyone 70.5 or older: the qualified charitable distribution, which sends money directly from an IRA to a charity — up to $108,000 per year in 2025 — excluding it from income entirely. A QCD beats an itemized deduction because it works even with the standard deduction, reduces AGI (which controls Medicare premiums and Social Security taxation), and counts toward required minimum distributions. Retirees who write checks to their church while taking RMDs as taxable income are leaving real money on the table every single year.

How to run the comparison in ten minutes

1. 1
   Add up the big four

   Mortgage interest (Form 1098 from your lender), state and local taxes up to the current cap, charitable donations with receipts, and medical expenses above 7.5% of AGI. These four categories are 95% of most people's itemizable total.

2. 2
   Compare against your standard deduction

   Use the table above, including age add-ons. If the itemized total isn't clearly higher, take the standard and move on — there's no partial credit for almost qualifying.

3. 3
   If you're close, plan rather than accept

   Within a few thousand dollars of the line? Bunch two years of charity into one (a donor-advised fund makes this painless), prepay January's property tax installment in December where allowed, or schedule elective medical procedures into the same calendar year.

The bottom line

The standard deduction is a no-questions-asked discount that roughly 90% of filers should take. Itemizing is worth checking in exactly three situations: a big new mortgage, a high-tax state, or a big giving year. Run the ten-minute comparison annually, bunch deductions if you're near the line, and remember that retirement and HSA contributions cut your taxes either way.

A closing reframe that saves people from a common trap: a deduction is never a reason to spend money. Mortgage interest 'being deductible' returns at most your marginal rate on the slice above the standard deduction — you still spent the whole dollar to save a quarter. The right order of operations is to make the life decision first (the house, the gift, the medical procedure) and then arrange the tax treatment as efficiently as possible: bunching, donor-advised funds, timing. Households that chase deductions for their own sake reliably end up poorer than households that simply take the free standard deduction and invest the difference.