Need to Know Tax › Deductions, credits, and gains
Deductions, credits, and gains
Itemized vs. standard
Mortgage interest, state and local taxes, charitable gifts, and medical bills: what can be itemized, and how to tell whether itemizing beats the standard deduction. For most households it no longer does; for homeowners with a good income in a state with an income tax, the higher SALT cap put it back in play.
By Charles Trautman, EA
The Tax Shop · Lone Tree, Colorado · Reviewed October 14, 2026
Every taxpayer gets to subtract one of two things from income before tax is figured: the standard deduction, a flat amount set by filing status, or the total of their itemized deductions, a list of specific expenses added up on Schedule A. You use whichever is larger. There is no advantage to itemizing for its own sake, and since the standard deduction was nearly doubled in 2018, most households take the flat amount and never see Schedule A. The 2025 law’s higher cap on state and local taxes moved some homeowners back across the line, which is why the comparison is worth running again this year.
| Filing status | Basic | Age-65 add-on | Both 65+ (joint) |
|---|---|---|---|
| Single | $16,100 | $2,050 | — |
| Head of household | $24,150 | $2,050 | — |
| Married filing jointly | $32,200 | $1,650 per spouse | $35,500 |
The add-on applies at 65 or if blind. The $6,000-per-person senior deduction for 2025 through 2028 comes on top of whichever choice is made, itemized or standard, so it does not enter the comparison. That is the bar itemizing has to clear.
What can be itemized
State and local taxes. State income tax withheld or paid during the year (or sales tax instead, if your state has no income tax), including last April’s balance due and the January estimated payment, plus property tax on your home. The 2025 law raised the cap on this deduction from $10,000 to $40,000 for 2025 and $40,400 for 2026, rising 1% a year, with a phase-down for incomes over about $505,000 that bottoms out at the old $10,000. For a homeowner with a good income, this line alone can approach the standard deduction.
Mortgage interest. Interest on a loan used to buy, build or improve your main home or a second home, reported on Form 1098. The deduction is limited to interest on $750,000 of such debt for loans taken out after 2017 (verify); older loans keep the $1 million limit. Interest on a home equity loan counts only if the money went into the house. Mortgage insurance premiums are deductible again from 2026 (verify).
Charitable gifts. Cash and property given to qualified charities, with a receipt. From 2026 itemizers lose the first 0.5% of adjusted gross income of their gifts, and taxpayers in the top bracket get at most 35 cents of benefit per dollar. People who do not itemize get a separate deduction of up to $1,000 of cash gifts, $2,000 on a joint return, from 2026.
Medical expenses count only above 7.5% of adjusted gross income, which is a high bar unless the year included a nursing home, long-term care or large uninsured bills.
Gone since 2018, now permanently: unreimbursed employee expenses, tax preparation fees, investment fees, union dues and the other “miscellaneous” deductions; moving expenses except for the military; casualty losses outside a declared disaster.
Running the comparison
Worked example: the same house, two filing statuses
A home with $4,500 of property tax and $8,000 of mortgage interest; $9,000 of state income tax paid; $6,000 of charitable gifts; AGI of $150,000.
| Married couple | Single homeowner | |
|---|---|---|
| State and local taxes (under the $40,400 cap) | $13,500 | $13,500 |
| Mortgage interest | $8,000 | $8,000 |
| Charitable gifts after the 0.5% floor ($750) | $5,250 | $5,250 |
| Total itemized | $26,750 | $26,750 |
| Standard deduction | $32,200 | $16,100 |
| Which wins | Standard, by $5,450 | Itemized, by $10,650 |
| What the $6,000 of gifts was worth | $2,000 on the non-itemizer line: $440 at 22% | $5,250 on Schedule A: $1,155 at 22% |
The same expenses, a different answer; it depends on the filing status, not the house. The couple would need more than $11,450 of gifts, after the floor, to beat the standard deduction. The single homeowner is already past the line before giving a dollar, so every gift counts.
When the total hovers near the line, timing is the tool. Paying January’s property tax installment and two years of charitable gifts in one December, then taking the standard deduction the next year, often beats itemizing a little every year. The couple above, giving $12,000 every second year instead of $6,000 every year, itemizes in the on year with $32,750 of deductions (barely over the line) and takes the $32,200 standard deduction in the off year, for $550 more deduction over two years; bunching three years’ gifts does better still. A donor-advised fund makes the timing invisible to the charities.
Behind the scenes
The software compares the two totals and picks the larger, but it only knows what was entered. A preparer asks for the property tax bill, the Form 1098, the state tax paid with last year’s return, and the year-end charity statements before accepting the standard deduction. The state estimated payment made in January, and last April’s balance due, are the state taxes most often left off Schedule A. For a couple near the line, those two lines are often the difference.
The Massachusetts side
Massachusetts has no standard deduction and no itemizing, so the choice above changes nothing on Form 1: neither the $26,750 nor the $32,200 ever reaches the Massachusetts return. In their place Massachusetts allows personal exemptions, $4,400 single, $6,800 head of household, $8,800 joint, plus $1,000 per dependent and $700 at 65, and its own short list of deductions that have nothing to do with Schedule A: up to $2,000 of Social Security and Medicare tax withheld per person, half of rent paid up to $4,000, commuting costs over $150 up to $750, charitable gifts (since 2023, no itemizing needed), undergraduate student loan interest with no cap, and 529 contributions up to $1,000 or $2,000. Mortgage interest and property tax are federal-only matters in Massachusetts; the state’s property tax break is the Senior Circuit Breaker Credit for those 65 and over. The one Schedule A item that crosses over is medical: if you itemize federally, Schedule A line 4 becomes a Massachusetts exemption. The full picture is in How Massachusetts income tax works.
What to bring your preparer
- Form 1098 from each mortgage lender, and the closing statement for a loan taken out or refinanced this year
- Property tax bills for your home and any second home
- State income tax paid during the year: withholding on W-2s and 1099s, estimated payments with dates, and the balance paid with last year’s return
- Year-end charitable statements and acknowledgments for gifts of $250 or more; a list of noncash donations
- Medical totals if the year was a large one, including Medicare and supplement premiums
- If you are near the line: next year’s expected gifts and property tax, so bunching can be planned
Questions people ask
We’ve taken the standard deduction since 2018. Should we look again?
Yes, if you own a home and have a good income, especially in a state with an income tax. The SALT cap quadrupled; a couple paying $12,000 of state income tax and $5,000 of property tax now deducts all $17,000 instead of $10,000, and with mortgage interest and gifts may be over $32,200.
Is my home equity line deductible?
Only the interest on the part used to buy, build or improve the home. A HELOC used to pay off credit cards or buy a car is not deductible, however the bank labels it.
Can we split: one of us itemizes and the other takes the standard deduction?
Only on separate returns, and if one spouse itemizes the other must too; the standard deduction for the other is zero. Married filing separately almost never comes out ahead.
Does the senior deduction count as itemizing?
No. It is a separate $6,000 per person (2025–2028) that applies on top of either the standard or itemized deduction, and the choice between those is made without it.
I itemized but my refund went down. Why?
Itemizing only helps by the amount it exceeds the standard deduction. If your total was $33,000 against a $32,200 standard deduction, the benefit was $800 of deduction, about $176 of tax. The paperwork is the same either way.
What else goes on Schedule A besides taxes, interest, charity and medical?
A short list. Gambling losses, up to gambling winnings, and starting in 2026 only 90% of losses count. Investment interest, up to net investment income. Casualty and theft losses from federally declared disasters. Starting in 2026, unreimbursed educator expenses, for teachers who itemize (the $300 above-the-line deduction remains for those who do not). Gone since 2018 and not coming back: unreimbursed employee expenses, tax preparation fees and investment advisory fees.
Bring the four documents and let the arithmetic decide
The property tax bill, the Form 1098, the state tax paid with last year’s return, and the year-end charity statements. With those four in hand, the comparison takes a minute, and the answer changes from year to year.
Written by Charles Trautman, EA, editor · Need to Know Tax, Lone Tree, Colorado
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