Loading...
Loading...
The deduction decision most Americans get wrong every April.
Deductions reduce your taxable income — the number your tax brackets are applied to. A $10,000 deduction does not save you $10,000 in taxes; it saves you $10,000 x your marginal tax rate. At the 22% bracket, a $10,000 deduction saves you $2,200.
Each year you subtract one or the other from your Adjusted Gross Income (AGI): the standard deduction (a flat amount) or itemized deductions (a tally of qualifying expenses). The IRS gives you whichever is larger, but you cannot mix and match in the same year.
| Filing Status | Standard Deduction |
|---|---|
| Single | $15,000 |
| Married Filing Jointly | $30,000 |
| Head of Household | $22,500 |
| Married Filing Separately | $15,000 |
| Age 65+ or blind (additional) | +$1,600 (single) / +$1,300 (married) |
* The additional amount for age 65+ or blindness stacks on top of the base standard deduction.
These are the main categories on Schedule A. You add them up — and if the total exceeds your standard deduction, itemizing saves you money.
Interest on up to $750,000 of mortgage debt (loans after Dec. 15, 2017). Older loans may qualify up to $1M. Usually the largest itemized deduction for homeowners.
Property taxes plus state income or sales tax. Capped at $10,000 per return ($5,000 MFS) — a major limitation for high-tax states like CA, NY, NJ.
Cash donations up to 60% of AGI to qualifying organizations. Non-cash donations (clothing, furniture) up to 30% of AGI with receipts.
Only the portion exceeding 7.5% of AGI is deductible. Most people do not clear the threshold unless they had major medical costs.
If your itemized deductions are close to but not quite above the standard deduction, consider bunching: push two years of charitable donations into one tax year (itemize that year), then take the standard deduction the next year.
Example: You normally donate $5,000/year and have $12,000 in other deductions. That is $17,000 — just above the $15,000 standard deduction. Not worth the complexity. Instead: donate $10,000 every other year — $22,000 in deductions vs $15,000 standard. You save an extra $7,000 x your tax rate every two years.
A flat dollar amount the IRS lets you subtract from your AGI without tracking individual expenses. In 2025: $15,000 (single), $30,000 (MFJ), $22,500 (HOH).
A list of specific eligible expenses (mortgage interest, SALT, charitable gifts, medical costs) that you tally up on Schedule A. Only beneficial if the total exceeds the standard deduction.
The $10,000 annual limit on state and local tax deductions (state income or sales tax + property tax combined). Introduced by the 2017 Tax Cuts and Jobs Act — currently still in effect.
Deliberately concentrating deductible expenses (especially charitable donations) into one tax year to clear the standard deduction threshold, then taking the standard deduction the next year.
Quick Summary