Standard deduction vs. itemized: How to decide which tax filing approach is right

One of the biggest decisions you have to make at tax time is whether to take the standard deduction or itemize. More than 90% of taxpayers opt for the standard deduction, according to IRS data. But itemizing might make sense in a few situations, like if you paid a lot in mortgage interest or had high unreimbursed medical expenses in 2025.

Let's look closer at the difference between the standard deduction versus itemized returns. We'll also cover some important changes under the One Big Beautiful Bill Act (OBBB), signed into law by President Trump on July 4, 2025, that could affect your decision to take the standard deduction or itemize this tax season.

Read more: Everything you need to file your taxes on time

What is a standard deduction?

The standard deduction simplifies tax filing, using an amount set by the IRS that is deducted from your taxable income according to your filing status.

The standard deduction reduces your taxable income even if you don't have any deductible expenses and is adjusted every year to account for inflation. You may also be eligible for additional standard deductions if you're blind, disabled, or over 65.

Although taking the standard deduction is easier because it doesn't require tracking expenses, your goal is a lower tax bill. So if you have deductible expenses that add up to a bigger break, itemizing is generally the better choice.

How much is the standard deduction?

Single filers or heads of household who are 65 and older can take an additional standard deduction of $2,000 on top of the standard amount for 2025 returns. Married couples filing jointly who are over 65 are eligible for an additional $1,600 per person or a total $3,2100 in deductions. Blind taxpayers can also deduct more money depending on their age and filing status.

The OBBB creates an additional standard deduction for people 65 and older. For tax years 2025 through 2028, people 65 and older can deduct an additional $6,000 (single filers and heads of household) and $12,000 (married joint filers) on top of the amounts listed above. That means your 2025 standard deduction could be as high as $23,750 if you're a single filer or $46,700 if you're married filing jointly if you're at least 65.

Unlike the regular standard deductions, though, the additional standard deduction for seniors created under the OBBB begins to phase out if your income exceeds $75,000 (single filers) or $150,000 (married joint filers). If your income is above $175,000 (single filers) or $250,000 (married joint filers), you'll be ineligible for the standard deduction altogether.

Read more: What is taxable income?

What is an itemized deduction?

The IRS allows you to pick from a menu of individual deductions that can ultimately add up to a lower tax bill than if you took the standard deduction. That's known as itemizing.

The rub is you can't take both the standard deduction and itemized deductions — you must pick one approach and stick to it. While itemizing deductions can seem intimidating, most tax software walks taxpayers step-by-step through the process.

Above-the-line deductions vs. below-the-line deductions

Itemized deductions are sometimes referred to as below-the-line deductions. For tax purposes, "the line" is your adjusted gross income. So below-the-line deductions are adjustments you're allowed to make after calculating your taxable income.

Above-the-line deductions are adjustments you're allowed to make before you calculate AGI. Bonus: You can take them whether you choose to take the standard deduction or itemized deductions. Common above-the-line deductions include:

• Student loan interest

• Most pre-tax contributions to retirement accounts

• Health savings account contributions

• Educator expenses

• Qualified business income.

The OBBB creates several temporary deductions for tax years 2025 through 2028:

• Car loan interest deduction: You can deduct up to $10,000 of car loan interest on new vehicles purchased after Dec. 31, 2024, that were assembled in the U.S.

• Deduction of tips: Under the law's "no taxes on tips" provision, you can deduct up to $25,000 of tips you earned.

• Overtime deduction: The OBBB lets workers deduct up to $12,500 (or $25,000 for joint filers) in extra wages they receive as overtime pay. Essentially, this means that if you earn time-and-a-half for working overtime, you don't have to pay taxes on the "and a half" portion. So if you normally earn $30 an hour, but you get $45 for overtime hours, you'd only owe taxes on the $30.

Just remember, when you're talking about itemizing, you're dealing with below-the-line deductions.

Read more: Tax credit vs. tax deduction: What's the difference and which is better?

When to itemize deductions 

It pays to determine which deductions you're eligible for. Here are five common itemized deductions. You should review the rules for each carefully to determine your eligibility or consult a tax pro.

1. Unreimbursed medical expenses

If your medical bills that aren't covered by insurance total more than 7.5% or your adjusted gross income (AGI), you can deduct medical and dental expenses in excess of that amount. Deductible expenses include prescription drugs, payments for telehealth or hospital care, dentures, and more.

You can only deduct the portion of your unreimbursed medical expenses above 7.5% of your income. In other words, if your income is $100,000 and you had out-of-pocket medical costs of $10,000, you'd only be able to deduct $2,500 worth of healthcare expenses.

Tax tip: You can deduct health premiums if you're self-employed, even if you don't itemize your return.

2. Mortgage interest deduction

If you financed a home or second home, you're probably eligible for a deduction on the interest you pay on the mortgage. However, limitations apply: The IRS allows deductions on home mortgage interest up to the first $750,000 of your mortgage debt (or $375,000 for married filing separately).

3. Charitable contribution deduction

Your charitable donations can be tax-deductible but there are some caveats. The charity that benefits from your gift must be an IRS-recognized organization, and you can only deduct a portion of your adjusted gross income (up to 60%).

Use the IRS Tax Exempt Organization Search tool to determine if your charitable donation qualifies.

Note that under the new tax law, you'll be able to deduct charitable contributions of up to $1,000 (single filers) or $2,000 (married couples filing jointly) without itemizing. The change takes effect in the 2026 tax year, meaning it applies to returns due in 2027.

4. Property tax and local tax deduction

If you pay a significant amount in SALT taxes, or state and local taxes (which can come in the form of income taxes, property taxes, or sales taxes), itemizing could yield big savings this year. The OBBB quadruples the SALT deduction from $10,000 to $40,000 for single and joint filers (or $5,000 to $20,000 for married couples filing separately) in tax years 2025 through 2029.

The deduction phases out for filers with adjusted gross incomes above $500,000 (or $250,000 if you're married filing separately). Once your income hits $600,000, you can only deduct the original $10,000. The phaseout range will increase by 1% annually through 2029.

5. Casualty loss deduction

Keep in mind that the IRS provides an array of other types of less common itemized deductions (yes, you can actually deduct your gambling losses) that may pay off in specific tax situations or during certain tax years.

But itemizing in general has become much less common since the passage of the 2017 Tax Cuts and Jobs Act (TCJA). The law substantially increased the standard deduction, prompting millions of people to stop itemizing. These changes were originally set to expire at the end of 2025, but the OBBB made the higher standard deductions permanent and also increased them slightly.

The individual income tax provisions in the law expire in 2025 and are certain to be the subject of intense negotiating when Congress considers what provisions to extend.

Pros and cons of the standard deduction

Still not sure when to itemize deductions or if you should even try? Here are the advantages (and a few disadvantages) of taking the simple route in preparing your taxes.

Pros:

• Flat dollar amount

• Easier, faster process

• No expense tracking or receipts required

Cons:

• Could take less off your taxes than itemizing

• Not available to all taxpayers

Pros and cons of itemized deductions

Think you should take the plunge and itemize your taxes this year? There are a few situations when it makes sense to itemize deductions, especially if you already have to itemize for local taxes. Here are a few other reasons to itemize, plus one big reason not to.

Pros:

• Potential to maximize your tax savings

• Good for big, one-time expenses, like a major medical bill

Cons:

• More time-consuming manual process

There's no way around it. Itemizing your taxes requires more work, both in keeping records and receipts throughout the year and in preparing your taxes. However, spending that time could pay off — both in a bigger tax refund and empowering you to more closely manage your finances.

Standardized deduction vs. itemized FAQs

1. Does adjusted gross income (taxable income) affect whether you should itemize?

As a general rule, you should take the deduction that ensures the biggest refund regardless of your adjusted gross income. However, if your earned income in the last tax year bumped you up a tax bracket, you may want to pay closer attention to itemized deductions that could maximize your tax savings.

2. Do itemized deductions mean a bigger tax refund?

Sometimes, but not always. Itemizing your taxes can result in a bigger refund, but make sure you understand the rules for the allowable deductions and that you have documentation. Otherwise, you'll risk getting a notice that you're being audited.

3. Do you lose the standard deduction if you itemize deductions on your federal tax return?

Yes. The IRS specifies you can either claim the standard deduction amount for your filing status or itemize deductions, but not both. So, if you choose the standard deduction, you lose your opportunity to itemize. Remember that sometimes you may be eligible for a higher standard deduction if you're blind or over 65 and no one can claim you as a dependent. There are also "above-the-line" deductions available, regardless of whether you itemize.

4. Can everyone take the standard deduction?

Most taxpayers can claim the standard deduction, but there are a few exceptions. You can't take the standard deduction if you're married, filing separately, and your spouse itemizes their returns. The standard deduction also isn't available to many nonresident aliens.