Should I take the standard deduction or itemize?
You take whichever is larger: the standard deduction, a fixed amount set by filing status, or your total itemised deductions such as state and local taxes, mortgage interest, and charitable gifts. Most taxpayers now take the standard deduction because it exceeds their itemised total, which changes how charitable giving should be timed.
For tax year 2025
Key points
- A taxpayer subtracts the larger of the standard deduction or total itemised deductions, and the choice is made fresh each year on Form 1040.
- The standard deduction is a fixed amount set by filing status, adjusted annually, with an additional amount for a taxpayer who is at least sixty-five or blind.
- Itemised deductions on Schedule A are chiefly state and local taxes up to the cap, home mortgage interest, charitable contributions, and medical expenses above a floor.
- Most households now take the standard deduction because it exceeds their itemised total, so a routine charitable gift produces no separate tax benefit.
- Bunching several years of charitable giving into one year, often through a donor-advised fund, can lift that year's itemised total above the standard deduction.
How do you decide between the standard deduction and itemising?
Every taxpayer subtracts either the standard deduction or their itemised deductions from adjusted gross income, whichever is larger. The standard deduction under section 63 is a fixed amount that depends on filing status and adjusts each year, with an additional amount for a taxpayer who is at least sixty-five or blind. Itemised deductions are the sum of specific outlays listed on Schedule A.
The comparison is made fresh each year on Form 1040, and nothing prevents switching from one method to the other as circumstances change. A married couple filing separately must both use the same method.
What counts as an itemised deduction?
The main Schedule A categories are state and local income or sales taxes plus property taxes, together capped at a fixed annual amount; home mortgage interest on acquisition debt up to a principal limit; charitable contributions to qualified organisations; and medical expenses only to the extent they exceed a floor set as a share of adjusted gross income.
Miscellaneous itemised deductions such as unreimbursed employee expenses and tax preparation fees were suspended and are no longer available. That suspension, combined with the cap on state and local taxes, is why the itemised total for most households now falls below the standard deduction.
Why does the standard deduction change how you give to charity?
Since the standard deduction was raised, most households take it, and their individual charitable gifts produce no separate tax benefit. That is not a reason to give less; it is a reason to give differently.
The lever is timing. Bunching several years of giving into a single year, often by funding a donor-advised fund and granting from it over time, can push that year's itemised total above the standard deduction, so you itemise in the giving year and take the standard deduction in the years between. Giving appreciated securities held longer than a year instead of cash adds a second layer: the deduction is the full fair value and the built-in gain is never taxed. For business owners, some deductions individuals lost still live inside the business, which is why the entity return and the personal return are read together.
What are the limits of itemising and bunching?
Itemising only helps to the extent the total exceeds the standard deduction; the first portion of any itemised outlay simply replaces what would have been deducted anyway. Charitable deductions are limited each year to a share of adjusted gross income that depends on the type of property and the type of organisation, with any excess carried forward for up to five years.
State and local taxes remain capped regardless of how they are timed, and mortgage interest on debt above the principal limit is not deductible. A donor-advised fund gift is irrevocable once made. Compare the current standard-deduction figure for your filing status against a realistic itemised total before deciding, and against a multi-year total before committing to a bunching plan.
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Sources
Related guides: high income professionals
Mena Hemaia, CPA, CIA
Chief Executive Officer, Accountack — West Palm Beach, Florida
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