Should you itemize or take the standard deduction in 2025

Choosing between the standard deduction and itemizing is one of the most consequential decisions taxpayers face each filing season. For the 2025 tax year, this decision carries even greater weight due to sweeping changes introduced by the One Big Beautiful Bill Act (OBBBA), which reshaped standard deduction 2025 amounts, expanded the state and local tax (SALT) deduction cap, and introduced a brand-new senior bonus deduction. These updates mean that many taxpayers who previously defaulted to one method may now benefit from switching to the other.

Understanding which approach yields a lower tax bill requires a careful comparison of your total eligible itemized deductions against the updated standard deduction for your filing status. With tools like Instead's comprehensive tax platform, you can confidently determine the best path and keep more of your hard-earned money. This guide walks you through the updated 2025 figures, qualifying expenses, and decision-making strategies to help you make an informed choice when you file in 2026.

What changed with the standard deduction in 2025

The OBBBA permanently increased the standard deduction amounts that were originally set to sunset at the end of 2025 under the Tax Cuts and Jobs Act. For the 2025 tax year, the standard deduction amounts are now higher than previously projected, giving taxpayers a larger baseline reduction before they even consider itemizing.

The updated 2025 standard deduction amounts are as follows:

• Single or married filing separately, receive a standard deduction of $15,750
• Married filing jointly or a qualifying surviving spouse receives a standard deduction of $31,500
• Head of household receives a standard deduction of $23,625

Taxpayers aged 65 or older also qualify for an additional standard deduction of $2,000 if unmarried or $1,600 per qualifying spouse if married filing jointly. On top of that, the OBBBA introduced a temporary senior bonus deduction of up to $6,000 per qualifying individual (or $12,000 for married couples where both spouses are 65 or older) for tax years 2025 through 2028. This bonus begins phasing out at a modified adjusted gross income of $75,000 for single filers and $150,000 for joint filers, decreasing by 6 cents for every dollar above those thresholds.

These higher amounts mean that your itemized deductions must exceed a significantly higher threshold before itemizing becomes worthwhile. For a married couple both aged 65 and older with income below the phase-out, their combined standard deduction could reach as high as $46,700 when all additional amounts are factored in. Exploring Individual tax strategies can help you determine whether your deductions warrant itemizing at these elevated thresholds.

How the SALT cap increase affects your decision

One of the most significant changes under the OBBBA is the increase of the SALT deduction cap from $10,000 to $40,000 for taxpayers with modified adjusted gross income below $500,000 ($20,000 if married filing separately). This fourfold increase is a game-changer for homeowners and residents of high-tax states who previously found that the SALT limitation pushed them toward the standard deduction.

Before this change, taxpayers in states like California, New York, New Jersey, and Illinois often saw their combined state and property taxes exceed the $10,000 cap. Now, with up to $40,000 in SALT deductions available, the calculus has shifted dramatically. A taxpayer paying $15,000 in state income taxes and $12,000 in property taxes can now deduct the full $27,000 rather than being capped at $10,000. When combined with mortgage interest and charitable contributions, this could push total itemized deductions above the standard deduction threshold.

Review your 2026 California State Tax Deadlines or the deadline page for your state to stay on track as you plan your filing strategy. For those with income above $500,000, the SALT cap is gradually reduced by 30% until it returns to $10,000 at the highest income levels.

What expenses qualify for itemized deductions

Itemized deductions are claimed on Schedule A (Form 1040) and allow you to deduct specific expenses that exceed the standard deduction amount. Understanding which expenses qualify is essential for determining whether itemizing is the right choice for your situation.

The primary categories of itemized deductions include:

1. State and local taxes (SALT), consisting of state income taxes or sales taxes, plus local property taxes, are now deductible up to $40,000
2. Mortgage interest on up to $750,000 of qualified residence debt for loans originated after December 15, 2017 (see IRS Publication 936, Home Mortgage Interest Deduction)
3. Charitable contributions to qualified 501(c)(3) organizations are deductible up to 60% of adjusted gross income for cash donations (see IRS Publication 526, Charitable Contributions)
4. Medical and dental expenses that exceed 7.5% of your adjusted gross income (see IRS Publication 502, Medical and Dental Expenses)
5. Casualty and theft losses attributable to federally declared disasters

Each of these categories has specific documentation requirements and limitations. Charitable contributions, for example, require written acknowledgment from the receiving organization for donations of $250 or more. Medical expenses must be unreimbursed and directly related to the diagnosis, treatment, or prevention of disease. Homeowners looking to maximize their deductions should also explore the Sell your home strategy to take advantage of additional tax-saving opportunities when disposing of residential property.

When the standard deduction makes more sense

The standard deduction is the right choice for most Americans, and the OBBBA's higher amounts have only widened the gap. According to IRS data, approximately 90% of taxpayers have historically claimed the standard deduction, and that percentage is expected to remain high even with the expanded SALT cap.

The standard deduction is typically the better option when your total itemized deductions fall below the applicable threshold for your filing status. This is common for taxpayers who rent rather than own a home, have modest state and local tax obligations, make limited charitable contributions, or live in states with no income tax.

The standard deduction also offers simplicity. Claiming it requires no additional documentation, no Schedule A preparation, and no risk of having deductions disallowed during an audit. For more on standard deduction eligibility and filing requirements, refer to IRS Publication 501, Dependents, Standard Deduction, and Filing Information.

Additionally, several new OBBBA provisions are available regardless of whether you itemize or take the standard deduction, including:

• The new senior bonus deduction of up to $6,000 per qualifying individual
• The deduction for qualified tips (up to $25,000 for eligible workers)
• The deduction for qualified overtime compensation (up to $12,500 single or $25,000 joint)
• The deduction for qualified car loan interest (up to $10,000 on new U.S.-assembled vehicles)

The above-the-line and below-the-line deductions stack on top of either the standard deduction or itemized deductions, creating additional tax savings opportunities regardless of which filing method you choose.

When itemizing could save you more

While the standard deduction works for most filers, certain life circumstances and financial profiles make itemizing the clearly superior option. The expanded SALT cap under OBBBA means more taxpayers than in recent years may now benefit from itemizing.

You should strongly consider itemizing if your combined deductible expenses significantly exceed the standard deduction for your filing status. Scenarios where itemizing often wins include homeowners with large mortgage balances and significant property taxes, generous charitable givers who donate cash or appreciated assets, taxpayers with substantial unreimbursed medical expenses, and residents of high-tax states who now benefit from the $40,000 SALT cap.

A practical approach is to tally your potential itemized deductions and compare the total against your standard deduction. For example, a married couple filing jointly who pays $20,000 in state income taxes, $10,000 in property taxes, $12,000 in mortgage interest, and $5,000 in charitable contributions would have $47,000 in itemized deductions. That exceeds the $31,500 standard deduction by $15,500, producing meaningful additional tax savings.

Business owners may find additional advantages by combining itemized deductions with strategies such as the Home office deduction and Meals deductions to reduce their overall tax liability further. While business deductions are claimed separately on Schedule C rather than Schedule A, the interplay between business and personal deductions can influence your adjusted gross income and the effectiveness of your itemized deductions.

How to decide between itemizing and the standard deduction

Making the right choice requires a methodical comparison of your financial circumstances against the updated 2025 thresholds. Follow a structured approach to evaluate which method produces the lower tax liability.

Start by gathering documentation for all potential itemized deductions:

1. Your final 2025 state income tax payments and property tax bills
2. Form 1098 from your mortgage lender showing interest paid
3. Receipts and acknowledgment letters for charitable donations
4. Records of unreimbursed medical and dental expenses

Next, calculate your total potential itemized deductions by adding up each qualifying category. Compare that total against the standard deduction for your filing status, remembering to add any applicable additional standard deductions for age or blindness.

If your itemized deductions exceed the standard deduction by a meaningful amount, itemizing is the clear winner. If the two amounts are close, the standard deduction's simplicity and reduced audit risk may tip the balance. Taxpayers on the border should also consider a "bunching" strategy by accelerating charitable contributions or prepaying certain deductible expenses into a single year to push their itemized deductions over the threshold.

For a comprehensive view of your filing obligations across multiple states, the 2026 State Tax Deadlines resource can help you stay organized.

Special considerations for the 2025 tax year

The 2025 tax year presents unique planning opportunities that go beyond the basic standard-versus-itemized decision. The OBBBA introduced several provisions that interact with your deduction choice in important ways.

One notable advantage for 2025 filers is that there is no limitation on the tax benefit of itemized deductions. The old Pease limitation was permanently repealed under OBBBA. However, beginning in 2026, a new cap will limit itemized deductions for taxpayers in the 37% bracket to 35 cents per dollar. This makes 2025 a particularly advantageous year to maximize itemized deductions before that restriction takes effect.

Another consideration involves the child tax credit increase to $2,200 per qualifying child under the OBBBA. While this credit applies regardless of your deduction method, it affects your overall tax planning calculations. Families with qualifying children should explore the Child & dependent tax credits strategy to ensure they capture every available benefit.

Taxpayers who invest in retirement accounts should also factor in how contributions to a Traditional 401k affect their adjusted gross income, which in turn influences the effectiveness of both itemized and standard deductions.

Strategies to maximize your deduction benefit

Whether you choose the standard deduction or itemize, several strategies can help you extract the maximum tax benefit from your 2025 filing.

• Bunching charitable contributions into alternating years allows you to itemize in high-contribution years and take the standard deduction in off years
• Timing property tax payments strategically to ensure they fall within the tax year where they provide the greatest deduction benefit
• Maximizing retirement contributions to reduce adjusted gross income, which can make medical expense deductions more accessible (since they must exceed 7.5% of AGI)
• Tracking all eligible medical expenses throughout the year, including insurance premiums, prescription costs, and qualified long-term care expenses
• Leveraging the new OBBBA deductions for tips, overtime, and car loan interest, regardless of your deduction method

Investors should also consider Tax loss harvesting to offset capital gains and further reduce taxable income. This strategy works independently of your deduction choice and can produce significant savings when combined with either the standard deduction or itemized deductions.

For those with health-related expenses, contributing to a Health savings account provides an above-the-line deduction that reduces AGI before you even consider the standard deduction versus the itemizing decision. For more details on health plan tax advantages, see IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.

Make the most of your 2025 tax filing with Instead

The decision to itemize or take the standard deduction directly impacts how much you owe or receive as a refund. With the significant changes introduced by the OBBBA for the 2025 tax year, taking the time to evaluate both options is more important than ever.

Instead's intelligent system automatically analyzes your financial profile against the updated 2025 standard deduction amounts and itemized deduction thresholds, identifying which approach produces the greatest tax savings for your specific situation. The Instead platform generates detailed tax reporting that clearly illustrates the comparison between your standard and itemized deductions.

Stop leaving money on the table by defaulting to one method without running the numbers. Explore Instead's comprehensive tax platform and discover exactly how much you can save this filing season. Review our flexible pricing plans to get started today.

Frequently asked questions

Q: What is the standard deduction for 2025 for married filing jointly?

A: The standard deduction for married filing jointly in 2025 is $31,500. Couples where both spouses are 65 or older receive an additional $1,600 per spouse, plus the new OBBBA senior bonus deduction of up to $6,000 per qualifying spouse, potentially bringing the total to $46,700 if income remains below the phase-out thresholds.

Q: Is it better to itemize or take the standard deduction in 2025?

A: The better choice depends entirely on your individual financial situation. If your combined itemized deductions for SALT, mortgage interest, charitable contributions, and medical expenses exceed the standard deduction for your filing status, itemizing will save you more. Otherwise, the standard deduction is typically the simpler and more beneficial option.

Q: How does the new $40,000 SALT cap affect my deduction choice?

A: The increased SALT cap from $10,000 to $40,000 means that homeowners and residents of high-tax states can now deduct significantly more in state and local taxes. This change alone may push many taxpayers who previously took the standard deduction into itemizing territory, particularly those with combined state income taxes and property taxes exceeding $15,000 to $20,000.

Q: Can I switch between itemizing and the standard deduction from year to year?

A: Yes, you can choose between the standard deduction and itemizing each tax year based on which method produces the lower tax liability. Many taxpayers use a "bunching" strategy, concentrating deductible expenses into alternating years, itemizing when deductions are high, and taking the standard deduction when they are lower.

Q: What are the income limits for the new senior bonus deduction?

A: The $6,000 senior bonus deduction begins phasing out at a modified adjusted gross income of $75,000 for single filers and $150,000 for married couples filing jointly. The deduction decreases by 6 cents per dollar of income above these thresholds, so it is fully eliminated at approximately $175,000 for single filers and $350,000 for married joint filers.

Q: Do I need to itemize to claim the new OBBBA deductions for tips and overtime?

A: No. The new deductions for qualified tips, qualified overtime compensation, qualified car loan interest, and the senior bonus deduction are all available regardless of whether you itemize or take the standard deduction. These provisions operate independently of the Schedule A itemized deductions decision.