The Choice
Every taxpayer gets to subtract either the standard deduction or the total of their itemized deductions — whichever is larger. This reduces taxable income on Form 1040 Line 12.
2025 Standard Deduction Amounts
| Filing Status | Amount | Additional (Age 65+ or Blind) |
|---|---|---|
| Single | $15,000 | +$2,000 each |
| MFJ | $30,000 | +$1,600 each (per spouse) |
| MFS | $15,000 | +$1,600 each |
| HOH | $22,500 | +$2,000 each |
| QSS | $30,000 | +$1,600 each |
Most taxpayers take the standard deduction. About 10% itemize, typically because of large mortgage interest, significant charitable giving, or high state/local taxes.
Itemized Deductions (Schedule A)
| Category | What's Deductible | Limits |
|---|---|---|
| Medical expenses | Unreimbursed medical/dental | Only the amount exceeding 7.5% of AGI |
| State and local taxes (SALT) | Income tax OR sales tax + property tax | Capped at $10,000 ($5,000 MFS) |
| Mortgage interest | Interest on up to $750K of acquisition debt | $375K for MFS |
| Charitable contributions | Cash + noncash donations to qualified orgs | Cash: up to 60% of AGI. Noncash: varies. |
| Casualty/theft losses | Federally declared disaster losses only | $100 floor + 10% of AGI |
The SALT Cap
Since 2018, the combined deduction for state income taxes, local taxes, and property taxes is capped at $10,000 ($5,000 MFS). This is the single biggest reason many higher-income taxpayers who used to itemize now take the standard deduction.
Info
The SALT cap also affects AMT calculations. On Form 6251, the full SALT amount is added back as an AMT preference item (Line 2a), but the tax refund from the prior year is subtracted (Line 2b).
When to Itemize
Itemizing makes sense when the total of Schedule A deductions exceeds the standard deduction. Common scenarios:
- Large mortgage — interest on a $400K+ mortgage often exceeds $10K/year
- Significant charitable giving — taxpayers who tithe or make large donations
- High state taxes + mortgage — the combination pushes past the standard deduction even with the SALT cap
- Large medical expenses — a serious illness or procedure in a single year
In PaisaTax
PaisaTax computes both the standard deduction and Schedule A total automatically. Form 1040 Line 12 uses whichever is larger. The preparer can override this by enabling Schedule A and entering itemized amounts during Step 3 (Additional Situations).