What Deductions Do
Deductions reduce your taxable income — the amount the IRS actually applies tax rates to. A $1,000 deduction in the 22% bracket saves you $220 in tax.
The Standard Deduction
Most people take the standard deduction. It's a flat amount based on your filing status — no receipts, no tracking, no paperwork.
| Filing Status | 2025 Standard Deduction |
|---|---|
| Single | $15,000 |
| Married Filing Jointly | $30,000 |
| Head of Household | $22,500 |
If you're 65 or older or blind, you get an additional $1,600–$2,000 per qualifying condition.
Itemized Deductions
If your individual deductions exceed the standard deduction, you can itemize instead. The main categories:
Mortgage interest — Interest on up to $750,000 of mortgage debt. This is the biggest reason people itemize.
State and local taxes (SALT) — Income tax (or sales tax) plus property tax, capped at $10,000 total.
Charitable contributions — Cash donations to qualified organizations. Noncash donations over $500 require Form 8283.
Medical expenses — Only the amount exceeding 7.5% of your AGI. If your AGI is $60,000, only medical expenses above $4,500 count.
Tip
The $10,000 SALT cap is the main reason many people who used to itemize now take the standard deduction. Even with high property taxes and state income taxes, the cap limits your benefit.
Above-the-Line Deductions
These special deductions reduce your AGI regardless of whether you itemize. They're more valuable because lowering AGI can qualify you for other benefits.
| Deduction | Max Amount | Where it appears |
|---|---|---|
| Student loan interest | $2,500 | Schedule 1 Line 21 |
| HSA contributions | $4,150 self / $8,300 family | Schedule 1 Line 13 |
| Half of self-employment tax | Varies | Schedule 1 Line 15 |
| SE health insurance premiums | Varies | Schedule 1 Line 17 |
| IRA contributions | $7,000 ($8,000 age 50+) | Schedule 1 Line 20 |
Quick Decision Guide
Take the standard deduction if: Your total itemizable expenses are below $15,000 (Single) or $30,000 (MFJ). This applies to most taxpayers.
Itemize if: You have a large mortgage, significant charitable giving, or a combination that exceeds your standard deduction.