Should you itemize tax deductions or take the standard deduction?

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Figure out how it all stacks up.

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You know how people joke about showing up at their tax preparer’s office with giant boxes of receipts? Those days are essentially gone. When the Tax Cuts and Jobs Act became effective in 2018, the standard deduction was greatly increased, and many itemized deductions were restricted. For 2025, the One Big Beautiful Bill Act (OBBBA) further raised the standard deduction and added enhancements for seniors and the blind, shaping how taxpayers decide between the standard deduction and itemizing. In addition, the OBBBA added new tax deductions, even when you don’t itemize.

Tax deductions are amounts that you subtract from your income before calculating your federal taxes. (They differ from tax credits, which actually reduce the amount of tax that you have to pay.) On the first page of your tax return Form 1040, you start by listing your wages and other income. Further down the page, you’re allowed to take your choice of:

After the chosen deduction is subtracted, you’re left with your taxable income. Tax is calculated on that amount based on your income tax bracket.

The IRS says that, in general, your federal income tax will be lower if you take the larger of either your itemized deductions or the standard deduction. You might be able to easily estimate whether your itemized deductions could possibly be bigger than the standard deduction (see below). If the standard deduction will be larger, there’s no need to calculate your itemized deductions—or save all those receipts.

The IRS updates the standard deduction amounts annually, typically with ample time for you to plan and file. For the 2025 tax year, however, the OBBBA raised the 2025 and 2026 standard deduction amounts for each filing status. The standard deductions for the 2025 tax year are:

And for the 2026 tax year:

Note that if you’re blind, were listed as a dependent on someone else’s return, or if you’re age 65 or older, different calculations are used to find your standard deduction.

Medical and dental expenses. Great! You mean I can deduct my medical and dental expenses from my income? Not so fast. First, there’s a whole list of items that are not approved. Second, you can’t deduct any insurance premiums that were already deducted from your paychecks.

And here’s the big kicker: You can only start deducting medical expenses once they’ve surpassed 7.5% of your adjusted gross income (AGI). You can’t include costs that were reimbursed to you by your insurance or paid by someone else.

For example, if your AGI is $100,000, you can only deduct medical expenses over and above 7.5%, or $7,500. So if your out-of-pocket medical expenses are $5,000, you can’t add any medical expense amount to your itemized deduction list.

If your AGI is $100,000 and your out-of-pocket expenses are $10,000, you could include $2,500 in itemized medical deductions ($10,000 – $7,500).

Taxes you paid. You’ve likely already paid some taxes, such as real estate tax (if you’re a homeowner), state income tax (if your state assesses one), and sales tax. Shouldn’t you get credit for that? Yes, you can deduct some of these taxes, up to $40,000 ($20,000 for those married filing separately). So even if your real estate and personal property taxes total $60,000 (hope your school system is good!), you can only deduct $40,000 total. To figure out a possible deduction, you’d add up:

If you choose to deduct your sales taxes, this is where the pile of receipts could get unwieldy again. You’d add up the actual sales tax you paid on food, clothing, medical supplies, and motor vehicles for the whole year. If you don’t want to add up all those items, you can use the IRS Sales Tax Deduction Calculator. If it turns out your state and local income taxes are greater than your sales tax, you can use those in your deduction calculation instead.

But remember, the maximum deduction for all of these taxes added together is $40,000 for the 2025 tax year, and $40,400 for the 2026 tax year (future years will be indexed). In 2030, the SALT cap is slated to revert to the previous level of $10,000.

Interest you paid. According to the IRS, the rules for deducting interest vary depending on the purpose of the loan (business, personal, or investment). But for itemized deductions, the form is generally talking about interest you paid on a mortgage for your home, including private mortgage insurance (PMI). There are limits depending on what year your mortgage was taken out, what the loan was used for (to purchase or improve your home), and if your loan exceeds the fair market value of your home. Most of the time, you can use the Form 1098 provided by your lender to help in these calculations.

Gifts to charity. If you made a donation (of cash or property) to a qualified public charity (donations to donor-advised funds and private foundations don’t qualify), you may add that to your itemized deductions. Beginning with the 2026 tax year, however, under the OBBBA, you may only deduct charitable contributions that exceed 0.5% of your AGI. (See below for details of a new charitable contribution deduction for those who don’t itemize.)

Casualty and theft losses. If you had a casualty loss from a federally declared disaster, you may fill out a form to calculate your itemized deductions.

Now that you’ve identified your allowed itemized deductions, add up the categories. How did you do? Are you over or under the standard deduction listed on your tax form? If you’re under, the IRS recommends that you take the standard deduction. If you’re over the standard deduction, lucky you! Under the Tax Cuts and Jobs Act, there is no limitation on total itemized deductions.

The OBBBA introduced a few new top-line deductions (i.e., those you take in addition to the standard deduction).

If you can eyeball your list of possible itemized deductions and know that you won’t reach the standard deduction, then you can avoid saving receipts for those items. And you’ll be far from alone—since the 2018 changes, upwards of 90% of tax filers have opted for the standard deduction. Before the Tax Cuts and Jobs Act, according to IRS stats, more than 30% of taxpayers itemized.

A simpler tax filing process and less paper cluttering our homes. Those are good things.