One of the biggest questions taxpayers have when preparing their filing is: “should I itemize or take the standard deduction?” While everyone’s financial situation is different, the best choice depends upon which method would result in a lower tax bill. Although taking the standard deduction is usually easier, you may lose out on a substantial tax break if your deductible expenses exceed the standard deduction amount.
Not to be confused with tax credits, which directly lower your tax bill, tax deductions lower the amount of your taxable income. Since you can only use one deduction method each tax year, it’s essential to carefully consider your options. A knowledgeable tax professional can review your deductible expenses and help ensure you utilize the method that is most financially advantageous.
What Are the Advantages of Taking the Standard Deduction?
The standard deduction is a specific dollar amount that reduces the amount of your income subject to tax, adjusted each year for inflation. When taking the standard deduction, there is no need to document or prove your expenses. Rather, the deduction amount is simply based upon your tax filing status. Since it does not require record keeping throughout the tax year, taking the standard deduction is simpler and faster for most taxpayers.
For tax year 2025, the standard deduction for each filing status is as follows:
- Single: $15,750
- Married filing separately: $15,750
- Married filing jointly: $31,500
- Head of household: $23,625
Taxpayers who are over 65 are eligible for an extra standard deduction, based on their filing status, and whether they are blind. In addition, thanks to the One Big Beautiful Bill, seniors who meet a certain income limit are eligible for an additional deduction amount of $6,000 until 2028.
You cannot both itemize and take the standard deduction in any given tax year. But you can still take above-the-line deductions if you choose to use the standard deduction. This can allow you to reduce your taxable income with IRA contributions, student loan interest, health savings account contributions, self-employment expenses, and certain other eligible expenses.
When is it Better to Itemize?
Itemizing can allow you to deduct a list of specific expenses from your taxable income. When you itemize, you forego the standard deduction. Nevertheless, itemizing may be the better option if the total amount of your eligible expenses is greater than the standard deduction amount for your tax filing status.
Some common itemized deductions for individual taxpayers can include the following:
- Home mortgage interest for up to two residences
- Local, state, real estate, and property taxes you have paid
- Unreimbursed medical and dental expenses that exceed 7.5% of your gross adjusted income
- Contributions to qualified charitable organizations
- Personal casualty and theft losses attributable to a federally declared disaster
- Gambling losses up to 90%, limited to your winnings
In addition, there may be situations in which you are required to itemize. For instance, if you file as “married filing separately,” and your spouse itemizes on their return, you must also itemize your deductions. Nonresident aliens and dual-status aliens must also itemize deductions, as they are typically not permitted to claim the standard deduction. However, nonresident aliens who are married to U.S. citizens at the end of the tax year may choose to be treated as U.S. residents for tax filing purposes.
Contact an Experienced Tax Professional
Knowing whether to itemize or use the standard deduction can be complex. It’s critical to have the guidance of a skilled tax professional who can best advise you. Based in Fairfield, Rolleri & Sheppard CPAs, LLP, provides a wide range of tax services to individual taxpayers and business owners. Contact us online or call (203) 259-CPAS to schedule a consultation to learn how we can assist you.
