When preparing your income tax return, one of the most common questions is whether you should take the standard deduction or itemize your deductions.
You may have heard that mortgage interest, property taxes, and charitable donations can help reduce your tax bill. But does that mean you should itemize?
Not necessarily.
Understanding the difference can help you see how these deductions work and why the best choice may change from year to year.
First, What Is a Tax Deduction?
A tax deduction reduces the amount of your income that is subject to income tax.
For example, if you earn $100,000 and qualify for a $20,000 deduction, your taxable income would generally be reduced to $80,000, before considering other adjustments.
That doesn’t mean you save $20,000 in taxes. It means you’re taxed on $20,000 less income.
When filing your federal income tax return, most taxpayers can choose between two approaches: taking the standard deduction or itemizing their deductions.
What Is the Standard Deduction?
The standard deduction is a fixed amount you can subtract from your income without having to list individual deductible expenses.
The amount depends primarily on your filing status, such as whether you’re single, married filing jointly, or head of household. It generally increases over time and may be higher for taxpayers who are age 65 or older or blind.
The biggest advantage is simplicity. You don’t need to have a mortgage, make charitable donations, or pay specific expenses to qualify.
For many taxpayers, the standard deduction provides a larger tax benefit than itemizing.
What Does It Mean to Itemize Deductions?
Instead of taking the standard deduction, you may be able to add up certain qualifying expenses and deduct their total.
This is called itemizing deductions, and it’s done on Schedule A of your federal income tax return.
Some common itemized deductions include:
- Mortgage interest: Qualifying interest paid on a home mortgage, subject to certain limits.
- State and local taxes: Eligible property taxes and state income taxes or sales taxes, subject to applicable limitations.
- Charitable donations: Qualifying contributions to eligible charitable organizations, subject to certain rules and limits.
- Medical and dental expenses: Certain unreimbursed expenses, but generally only the portion exceeding 7.5% of your adjusted gross income.
Not every expense qualifies, and some deductions have limits based on your income or other circumstances.
Which One Saves You More Money?
In most situations, the answer is straightforward: you generally want whichever deduction is larger.
Let’s look at a simplified example.
Suppose a married couple has the following qualifying itemized deductions:
| Expense | Amount |
|---|---|
| Mortgage interest | $14,000 |
| Property and other eligible state/local taxes | $9,000 |
| Charitable donations | $4,000 |
| Total itemized deductions | $27,000 |
Now assume their standard deduction for the year is $32,000.
Even though they paid mortgage interest, property taxes, and made charitable contributions, they would generally benefit more from taking the $32,000 standard deduction.
On the other hand, if their allowable itemized deductions totaled $38,000, itemizing would generally be the better choice.
The important takeaway is that having deductible expenses doesn’t automatically mean itemizing is better.
Does Owning a Home Mean You Should Itemize?
This is one of the biggest misconceptions we hear.
Homeowners often assume they should itemize because they pay mortgage interest and property taxes.
While those expenses may qualify as itemized deductions, the combined amount still needs to exceed the standard deduction for itemizing to provide a greater federal tax benefit.
For some homeowners, especially those with substantial mortgage interest or property taxes, itemizing makes sense.
For others, the standard deduction remains the better option.
What About Charitable Donations?
Charitable giving is another area that can create confusion.
If you itemize, qualifying charitable donations may increase your deductions, subject to applicable limitations.
Beginning in 2026, eligible taxpayers who take the standard deduction may also qualify for a separate deduction for certain cash charitable contributions, subject to annual limits.
This means you may receive a tax benefit for some charitable giving even if you don’t itemize.
For taxpayers making larger donations, especially gifts of appreciated investments, additional planning may be worthwhile.
Can the Best Choice Change Each Year?
Absolutely.
You might take the standard deduction one year and itemize the next.
Changes in your circumstances can affect the calculation, including:
- Buying or selling a home
- Paying more or less mortgage interest
- Making significant charitable donations
- Experiencing unusually high medical expenses
- Changes in income or applicable tax laws
That’s why it’s important to review your deductions each year rather than assume last year’s approach is still best.
The Bottom Line
For most taxpayers, the decision between the standard deduction and itemizing comes down to comparing the two amounts.
The standard deduction offers simplicity and often provides the greater benefit. Itemizing can make sense when qualifying expenses are substantial enough to exceed it.
At Durkin Advisory Group, we look beyond simply entering numbers on a tax return. We help individuals and families understand how their financial decisions affect their taxes and identify opportunities to plan ahead.
Whether you’ve purchased a home, made significant charitable contributions, or simply want to better understand your tax return, we’re here to help you make informed decisions.
Have questions about your deductions or personal tax planning? Contact Durkin Advisory Group to learn how we can help.