Standard Deduction vs Itemising: Which Saves You More?

Every US taxpayer reduces taxable income by either the standard deduction or the total of their itemised deductions, whichever is larger. For tax year 2026 the standard deduction is $16,100 for single filers and for married people filing separately, $32,200 for married couples filing jointly, and $24,150 for heads of household. Taxpayers aged 65 or over, or who are blind, add a further amount on top. These figures rise with inflation each year.

Itemising means listing specific deductible costs on Schedule A instead of taking the flat amount. The main categories are state and local taxes, mortgage interest, charitable contributions, medical expenses above a threshold, and certain casualty losses in federally declared disaster areas. Personal expenses that feel like they should count — commuting, childcare, most professional clothing, home office costs for an employee — do not.

State and local taxes, universally abbreviated SALT, cover state income tax or sales tax plus property tax, and are subject to a statutory cap. For high earners in states such as California, New York and New Jersey, this single cap is the reason itemising no longer pays off the way it did before 2018. Check the current cap each year, because it has been amended repeatedly and is politically contested.

Mortgage interest is deductible on acquisition debt up to a limit on your main home and one second home. Interest on a home equity loan is only deductible if the borrowed money was used to buy, build or substantially improve the property — using a home equity line to consolidate credit cards does not produce a deduction, even though the lender's statement looks identical.

Charitable giving must go to a qualifying organisation and be substantiated. Cash gifts of $250 or more require a written acknowledgement from the charity; property donations above certain values require appraisals. Donations to individuals, political campaigns and most foreign charities do not count. Medical expenses are deductible only to the extent they exceed 7.5 per cent of adjusted gross income, which is why they rarely matter unless a year involved surgery, long-term care or fertility treatment.

The decision itself is arithmetic. Add up your realistic SALT, mortgage interest and charitable totals. If the sum comes in below your standard deduction, take the standard amount and stop keeping receipts. Roughly nine in ten filers now land here, because the standard deduction was roughly doubled in 2018 and has been indexed upward every year since.

Where the result is close, timing can tip the balance. Bunching is the practice of concentrating deductible spending into alternate years: making two years of charitable gifts in December of one year, or prepaying a property tax instalment, so that you itemise in one year and take the standard deduction in the next. A donor-advised fund lets you take the deduction now and distribute to charities over following years, which makes bunching practical without leaving the charity waiting.

A final caution for couples: if you file separately and one spouse itemises, the other must itemise too, even if their itemised total is tiny. That interaction can turn a plausible separate-filing plan into an expensive one, so run both versions before committing. Our calculator lets you switch between the standard deduction and your own itemised figure so you can see the difference in the federal tax line immediately.