Standard vs. Itemized Deductions

Every return starts with a choice: take the standard deduction, a flat amount set by law, or itemize on Schedule A and deduct specific expenses such as state and local taxes, mortgage interest and charitable gifts. In most cases you use whichever is larger. The One Big Beautiful Bill Act raised the standard deduction and the state and local tax cap, so the answer has changed for many households.

The standard deduction

The standard deduction depends on your filing status. Amounts come from the IRS's inflation-adjustment guidance for each year.

If you or your spouse are 65 or older or blind, you add an extra amount for each condition: $1,600 per person for 2025 and $1,650 for 2026, or $2,000 (2025) and $2,050 (2026) if you are unmarried and not a surviving spouse. Someone who can be claimed as a dependent has a smaller standard deduction: the greater of $1,350 or earned income plus $450 for both years, but not more than the regular amount.

The age-65 additional amounts are separate from the newer senior deduction of up to $6,000 per person for 2025 through 2028, which is explained in our guide to the new deductions for tips, overtime, seniors and car loans.

What you can itemize

Schedule A groups itemized deductions into a few categories:

• Medical and dental expenses: only the part above 7.5% of your adjusted gross income (AGI).
• State and local taxes (SALT): state and local income tax or sales tax, plus real estate and personal property tax, up to the cap described below.
• Home mortgage interest: generally on up to $750,000 of acquisition debt. Starting in 2026, mortgage insurance premiums can again be treated as deductible interest.
• Gifts to charity: cash and property given to qualified organizations. See our charitable giving guide.
• Casualty and theft losses: limited to losses from federally declared disasters, and starting in 2026 also certain state-declared disasters.
• Other items: certain gambling losses (limited to winnings, and counted at 90% beginning in 2026) and a few smaller items. Most miscellaneous deductions, such as unreimbursed employee expenses, are no longer allowed.

The SALT cap for 2025 and 2026

The cap is $40,000 for 2025 ($20,000 if married filing separately) and $40,400 for 2026. It shrinks by 30 cents for every dollar your modified AGI exceeds $500,000 in 2025 ($505,000 in 2026), but it does not fall below $10,000. Under the law the cap rises 1% a year through 2029 and returns to $10,000 in 2030. See our full guide to the SALT deduction and property taxes.

A new limit for top-bracket taxpayers

Beginning in 2026, itemized deductions are reduced by 2/37 of the lesser of your itemized deductions or the income that falls in the 37% bracket. This only affects taxpayers who reach the top bracket. For 2026, charitable gifts by itemizers are also deductible only to the extent they exceed 0.5% of AGI.

Which is better: an example

Example: A married couple in DuPage County files jointly. In 2025 they paid $14,000 in Illinois income tax and property tax combined of $9,000, for $23,000 in state and local taxes. They also paid $12,000 in mortgage interest and gave $5,000 to charity. Their itemized total is $40,000, compared with a $31,500 standard deduction, so itemizing gives them $8,500 more in deductions. Under the old $10,000 SALT cap their itemized total would have been only $27,000, and they would have taken the standard deduction.

Another way to use the choice is "bunching": paying two years of charitable gifts or property taxes in one year so that you itemize in that year and take the standard deduction in the next. Whether this works depends on your numbers and on how state tax is billed, so ask before you prepay anything.

Common mistakes

• Itemizing out of habit when the standard deduction is larger.
• Forgetting that married couples filing separately must both itemize or both take the standard deduction.
• Deducting the same item twice, such as car loan interest on Schedule 1-A and again on a business schedule.
• Counting the full property tax bill when part was escrow for a different period or when taxes for a rental or business belong on another form.

Illinois and other states

Illinois starts from your federal adjusted gross income and does not let you subtract federal itemized deductions, so the federal choice does not change your Illinois taxable income. Illinois does offer credits of its own, such as a property tax credit. See our Illinois tax guide. Other states have deduction rules that differ from the federal ones, so check the state return as well.

How we can help

We run the numbers both ways, check that each deduction is documented, and look at whether timing payments across two years makes sense. See tax planning and individual tax preparation, or contact us.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.