One of the most important decisions on your tax return is whether to take the standard deduction or itemize. For the vast majority of taxpayers, the standard deduction is the better choice — but not always. Here is how to decide for 2025.
2025 Standard Deduction Amounts
The IRS has increased the standard deduction for 2025 to account for inflation:
| Filing Status | Standard Deduction |
|---|---|
| Single | $15,750 |
| Married Filing Jointly | $31,500 |
| Married Filing Separately | $15,750 |
| Head of Household | $23,625 |
Taxpayers age 65 or older get an additional $2,000 (single/HOH) or $1,600 per spouse (married filing jointly). These 2025 figures reflect OBBBA’s permanent $750 / $1,500 bump over the TCJA baseline; prior 2024 amounts were $14,600 / $29,200 / $14,600 / $21,900.
When Does Itemizing Make Sense?
You should itemize only if your total itemized deductions exceed the standard deduction. The most common itemized deductions include:
- State and local taxes (SALT): Property taxes plus state income or sales taxes. Under OBBBA (July 2025), the cap is $40,000 per return ($20,000 MFS) for 2025 and later — up from the $10,000 TCJA cap — with a phaseout above $500,000 MAGI reverting toward a $10,000 floor.
- Mortgage interest: On loans up to $750,000 for homes purchased after December 15, 2017.
- Charitable contributions: Cash donations up to 60% of AGI, plus fair market value of donated property.
- Medical expenses: Only the amount exceeding 7.5% of your adjusted gross income (AGI).
The SALT Cap Impact
Before 2018, taxpayers in high-tax states like California, New York, and New Jersey could deduct the full amount of their state and local taxes. TCJA capped the deduction at $10,000 for 2018–2024. OBBBA raised the cap to $40,000 ($20,000 MFS) starting in 2025, dramatically expanding the benefit for homeowners below the $500,000 MAGI phaseout. A homeowner paying $15,000 in property taxes and $12,000 in state income tax can now deduct the full $27,000, up from $10,000 under TCJA.
A Quick Decision Framework
You are likely better off with the standard deduction if:
- You rent rather than own a home
- You live in a low-tax state
- Your mortgage is small or paid off
- Your charitable giving is modest
Itemizing may save you more if:
- You have a large mortgage on a high-value home
- You make substantial charitable donations
- You had major unreimbursed medical expenses
- Your combined deductions clearly exceed the standard deduction threshold
Practical Example
Consider a married couple in 2025 with MAGI below $500,000 and:
- $27,000 in SALT (below the $40,000 OBBBA cap)
- $14,000 in mortgage interest
- $8,000 in charitable donations
Their total itemized deductions would be $49,000, which exceeds the $31,500 MFJ standard deduction by $17,500. At the 22% bracket, that saves them roughly $3,850 — a clear win for itemizing, made possible by OBBBA’s higher SALT cap.
Do Not Forget: Bunching Strategy
If your itemized deductions are close to the standard deduction, consider bunching — concentrating two years of charitable donations into one year so you can itemize in the high year and take the standard deduction in the other year. Donor-advised funds make this strategy especially easy.
Bottom Line
About 87% of taxpayers take the standard deduction, and for good reason: the 2025 amounts are generous. But if you have significant mortgage interest, charitable giving, or medical expenses, run the numbers both ways before filing.