Itemized Deductions vs Standard Deduction (HOH)
Should you itemize? Here's how to decide and maximize your deductions
The Big Decision
HOH Standard Deduction (2025)
$22,500
Automatic - No documentation needed
Simple - Just claim it on Form 1040
Itemized Deductions
Varies
Only if total > $22,500
Requires - Schedule A, documentation
Rule of Thumb:
Only itemize if your total deductions exceed $22,500. Since Tax Cuts and Jobs Act (2018), ~90% of filers take standard deduction. High-cost states and homeowners more likely to benefit from itemizing.
The Five Main Itemized Deductions
1. State & Local Taxes (SALT)
Limit: $10,000 maximum (property tax + state/local income tax combined)
- • State/local income tax OR sales tax (choose higher)
- • Property tax on primary + secondary homes
- • Foreign income taxes
2. Mortgage Interest
Limit: $750k mortgage debt (post-12/15/2017 loans)
- • Primary + second home combined
- • Home equity interest (only if used for home improvement)
- • Points on purchase (immediate deduction)
- • Points on refinance (amortize over loan life)
3. Charitable Contributions
Limit: 60% of AGI (cash donations to public charities)
- • Cash donations: 60% AGI limit
- • Appreciated stock: 30% AGI limit
- • Must have receipts ($250+ requires written acknowledgment)
- • Excess carries forward 5 years
4. Medical & Dental Expenses
Threshold: Only excess over 7.5% of AGI
- • Medical/dental care (doctors, prescriptions, etc.)
- • Health insurance premiums (if self-employed, deduct elsewhere)
- • Long-term care insurance (age-based limits)
- • Medical transportation & lodging
5. Other Itemized Deductions
- • Gambling losses (up to gambling winnings)
- • Casualty & theft losses (only federally declared disasters)
- • Tax prep fees (removed 2018-2025)
- • Investment expenses (removed 2018-2025)
Quick Calculation Worksheet
Add up your deductions:
Compare to Standard:
If total > $22,500: Itemize (Schedule A)
If total ≤ $22,500: Take standard deduction
Real-World Examples
✓ Example 1: Itemizing Makes Sense
Taxpayer: California homeowner, AGI $100,000
• State income tax + property tax: $10,000 (SALT cap)
• Mortgage interest ($600k loan): $18,000
• Charitable donations: $5,000
• Medical expenses: $10,000 total - $7,500 threshold = $2,500
Total itemized: $35,500
Benefit over standard: $35,500 - $22,500 = $13,000 extra deduction
Tax savings: $13,000 × 22% = $2,860
✗ Example 2: Standard Deduction Better
Taxpayer: Texas renter, AGI $60,000
• State income tax: $0 (no TX income tax)
• Property tax: $0 (renter)
• Mortgage interest: $0 (renter)
• Charitable donations: $3,000
• Medical expenses: $3,000 total - $4,500 threshold = $0
Total itemized: $3,000
Standard deduction: $22,500 (take standard)
Benefit: $19,500 higher with standard deduction
⚠️ Example 3: Close Call
Taxpayer: New York homeowner, AGI $80,000
• State/local taxes: $10,000 (SALT cap)
• Mortgage interest ($300k loan): $9,000
• Charitable donations: $2,000
• Medical expenses: $6,000 total - $6,000 threshold = $0
Total itemized: $21,000
Standard is $1,500 better → Take standard deduction
BUT: Donate extra $1,500 → itemizing saves more (bunching strategy)
💡 Bunching Strategy
If you're close to $22,500 threshold, "bunch" deductions into alternating years to exceed threshold every other year.
How It Works:
Year 1 (Itemize):
- • Make 2 years' charitable donations at once
- • Pay January property tax in December
- • Prepay state income tax (if allowed)
- • Schedule elective medical procedures
Year 2 (Standard):
- • Minimal charitable giving
- • Don't prepay taxes
- • Delay elective medical if possible
- • Take $22,500 standard deduction
Example:
Without Bunching (2 years):
• Year 1: $21,000 itemized → take $22,500 standard
• Year 2: $21,000 itemized → take $22,500 standard
• Total deductions: $45,000
With Bunching (2 years):
• Year 1: $33,000 itemized → itemize $33,000
• Year 2: $9,000 itemized → take $22,500 standard
• Total deductions: $55,500
Extra deduction: $10,500 → Tax savings: ~$2,310 (22% bracket)
Deductions Eliminated by TCJA (2018-2025)
Tax Cuts and Jobs Act suspended many itemized deductions through 2025:
Suspended Deductions (return in 2026 unless extended):
- • Miscellaneous itemized deductions (investment expenses, tax prep fees, unreimbursed employee expenses)
- • Moving expenses (except active military)
- • Casualty/theft losses (except federally declared disasters)
- • Alimony paid (for agreements after 2018)
What This Means:
In 2026, itemizing may become more attractive as these deductions return. However, standard deduction may also adjust. Stay tuned for 2025 legislation.
State-Specific Considerations
| Situation | Itemize Likelihood | Why |
|---|---|---|
| CA/NY/NJ/CT homeowner | High | High property + income tax hits $10k SALT cap, plus mortgage interest |
| TX/FL/WA homeowner | Medium | No state income tax, but property tax + mortgage could exceed $22.5k |
| Low-tax state renter | Very Low | No property/mortgage, low state tax → hard to reach $22.5k |
| Major medical event | Medium-High | Surgery/long-term care could push over 7.5% AGI threshold |
| High charitable giving | Medium-High | Combine with property taxes + mortgage to reach $22.5k |
⚠️ Common Mistakes
Not calculating medical threshold correctly
Only excess over 7.5% AGI counts. $10k expenses with $80k AGI ($6k threshold) = only $4k deductible.
Claiming more than $10k SALT
Combined property + income tax capped at $10k. Can't deduct $12k property + $8k income = max $10k.
Deducting charitable donations without receipts
$250+ requires written acknowledgment. $500+ clothing/household needs "good condition". $5,000+ appraisal.
Claiming home equity interest for non-home purposes
Post-2017, HELOC interest only deductible if proceeds used for home improvements (not debt consolidation, car, etc.).
Itemizing when standard is higher
Always calculate! Software does this automatically, but manual filers sometimes miss the comparison.