Articles · Basics · Individual Income Tax and Form 1040
Standard Deduction vs. Itemized Deductions
Each year, taxpayers generally subtract either the standard deduction or their total itemized deductions. Most choose whichever is larger.
The standard deduction
The standard deduction is a fixed amount set by filing status and adjusted for inflation each year. Taxpayers who are 65 or older, or blind, receive an additional amount. No receipts are required, which makes it the simple choice for most filers.
Itemized deductions
Itemizing means listing eligible expenses on Schedule A. The usual items are state and local taxes (subject to a cap), home mortgage interest, charitable gifts, and medical expenses above a percentage of AGI.
Good records matter. Charitable gifts in particular need written acknowledgment in many cases.
Making the choice
Add up the Schedule A items and compare the total with the standard deduction. If a taxpayer's items sit close to the standard amount, bunching can help: paying two years of charitable gifts in one year may allow itemizing in that year and taking the standard deduction in the next.
Married couples filing separately should take care. If one spouse itemizes, the other generally must itemize too.
The main itemized deductions in detail
State and local taxes cover income or sales tax, plus real estate and personal property taxes, subject to the federal cap in Section 164. Legislation in 2025 raised the cap for several years, with a reduction at higher incomes, so check the amount for the year being filed.
Home mortgage interest is generally deductible on acquisition debt up to $750,000, or $1 million for older loans, on a main and second home. Medical expenses count only to the extent they exceed 7.5% of AGI, so only large costs usually help. Charitable gifts are limited by percentages of AGI, and rules that began in 2026 add a small AGI-based floor for itemizers.
A worked comparison
Suppose a married couple filing jointly has $9,000 of deductible state and local tax, $14,000 of mortgage interest, and $6,000 of charitable gifts. Their itemized total is $29,000. They compare that with the standard deduction for that year and take the larger number. If the standard deduction were $31,000, itemizing would add no value, even with a mortgage and charitable giving.
This is why most taxpayers no longer itemize. A taxpayer can have a mortgage and still be better off with the standard deduction.
When the standard deduction is restricted
Not everyone gets the full amount. A person claimed as a dependent has a reduced standard deduction. Nonresident aliens and many dual-status taxpayers generally cannot claim it at all. A married person filing separately must itemize if their spouse itemizes, even if their own deductions are small.
Planning around the choice
Bunching is the most common strategy. Instead of giving $10,000 each year, a taxpayer might give $20,000 in one year and nothing in the next. A donor-advised fund can support this by allowing a large deduction now, with grants to charities spread over later years.
State returns deserve a separate look. Some states require the same choice as the federal return, while others allow a different one. A state tax refund may also be taxable in the following year, but only if the taxpayer itemized and received a tax benefit from the original deduction.
A preparer's checklist
Confirm the filing status and whether the taxpayer can be claimed as a dependent, because both affect the standard deduction. Check age and blindness for the additional amount, and confirm the correct figures for the tax year.
Next, gather Form 1098 for mortgage interest, property tax bills, and state tax payments, including estimated payments made during the year. Collect receipts and written acknowledgments for charitable gifts, and appraisals for large noncash gifts. Total medical expenses and test them against the 7.5% floor.
Compare the Schedule A total with the standard deduction, then consider the state return. Where the two results are close, check whether the taxpayer could bring forward or delay payments, and note the conclusion in the file for the following year.
Key takeaways
- Choose the larger of the two in most cases.
- Itemizing requires records.
- Bunching deductions can create value across two years.
Frequently asked questions
Can I take the standard deduction and still deduct charity?
Beginning in 2026, a limited deduction for cash gifts is available to people who do not itemize. Confirm the amount and eligibility rules for the year you are filing.
Can I switch between methods each year?
Yes. The choice is made annually, so a taxpayer can itemize in one year and take the standard deduction in the next.
Is mortgage interest deductible if I take the standard deduction?
No. Home mortgage interest is an itemized deduction. Mortgage interest on a rental or business property is handled separately on the relevant schedule.
For general education only, not tax advice. Tax law changes often, so confirm current rules and amounts with primary sources.