ST. CROIX INSIGHTS
Filing Taxes: Standard vs. Itemized Deductions
When filing taxes, deductions can be your biggest friend. You are entitled to either choose the standard deduction or your estimated itemized deductions—not both. Compare both and opt for the biggest tax bang for your bucks.
What is the standard deduction?
The standard deduction is a flat amount that is adjusted annually for inflation. For 2024 returns, it’s $14,600 for single filers and $29,200 for married joint filers. If you’re age 65 or older, you can take an additional standard deduction. This extra amount, which is also indexed for inflation, is $1,950 for a single filer and $1,550 for each qualified spouse filing a joint return for 2024.
What are itemized deductions?
Itemized deductions typically vary from year to year based on the amount of your eligible deductible expenses. Taxpayers need to provide detailed records and receipts to substantiate the deductions claimed.
Do I itemize or take the standard deduction?
The Tax Cuts and Jobs Act (TCJA) significantly changed tax deductions from 2018 to 2025. It suspended or modified several itemized deductions, such as medical expenses, state and local tax (SALT) deductions, mortgage interest, and personal casualty losses. At the same time, the standard deduction was nearly doubled and continues to be adjusted for inflation.
As a result, about 9 out of 10 taxpayers now take the standard deduction instead of itemizing. However, this doesn’t mean itemizing isn’t the better choice for some people. If you had substantial deductible expenses in 2024, you might still benefit from itemizing.
Common Itemized Deductions
- Charitable Contributions – Cash donations are deductible up to 60% of adjusted gross income (AGI), while non-cash donations (like property) are limited to 30% of AGI. Excess donations can be carried forward.
- Medical Expenses – Only unreimbursed medical expenses that exceed 7.5% of AGI can be deducted.
- State and Local Taxes (SALT) – The maximum deduction is $10,000 (or $5,000 if married filing separately).
- Mortgage Interest – Interest on up to $750,000 of home acquisition debt is deductible. Home equity loan interest is only deductible if the loan was used to improve the home.
- Personal Casualty Losses – Only deductible if caused by a federally declared disaster and exceed 10% of AGI (after a $100-per-event reduction).
If your total itemized deductions exceed the standard deduction, it may be beneficial to itemize. However, not all deductions require you to make this choice.
Some expenses, known as above-the-line deductions, can be claimed regardless of whether you itemize or take the standard deduction. These deductions reduce your adjusted gross income (AGI), which can also help you qualify for other tax benefits.can
Understanding Above-the-Line Deductions
Unlike itemized deductions, above-the-line deductions are subtracted before calculating your AGI. These deductions lower your taxable income and apply whether you itemize or take the standard deduction. Some common above-the-line deductions include:
- Contributions to traditional IRAs and self-employed retirement plans
- Self-employed health insurance premiums
- 50% of self-employment tax
- Student loan interest (subject to an annual limit)
- Health Savings Account (HSA) contributions
- Certain alimony payments
- Penalties for early withdrawals from CDs or savings bonds
- Classroom expenses for educators (subject to an annual limit)
Because above-the-line deductions reduce your AGI, they can also help you qualify for additional tax benefits and credits.
Don’t assume that either the standard deduction option or the itemized deductions option is better. Do the math. Your tax preparer can do the math if you provide all the necessary paperwork. If you use a tax software program, such as Turbo Tax, it will do the math for you as well. After you enter all the necessary information, it will opt for the standard deduction if your itemized deductions don’t exceed it.
Note: The TCJA changes are set to expire after tax year 2025 (filed in 2026) unless Congress acts to extend them, so the option that is best for you now may change next year.
When filing taxes, deductions can be your biggest friend. You are entitled to either choose the standard deduction or your estimated itemized deductions—not both. Compare both and opt for the biggest tax bang for your bucks.
What is the standard deduction?
The standard deduction is a flat amount that is adjusted annually for inflation. For 2024 returns, it’s $14,600 for single filers and $29,200 for married joint filers. If you’re age 65 or older, you can take an additional standard deduction. This extra amount, which is also indexed for inflation, is $1,950 for a single filer and $1,550 for each qualified spouse filing a joint return for 2024.
What are itemized deductions?
Itemized deductions typically vary from year to year based on the amount of your eligible deductible expenses. Taxpayers need to provide detailed records and receipts to substantiate the deductions claimed.
Do I itemize or take the standard deduction?
The Tax Cuts and Jobs Act (TCJA) significantly changed tax deductions from 2018 to 2025. It suspended or modified several itemized deductions, such as medical expenses, state and local tax (SALT) deductions, mortgage interest, and personal casualty losses. At the same time, the standard deduction was nearly doubled and continues to be adjusted for inflation.
As a result, about 9 out of 10 taxpayers now take the standard deduction instead of itemizing. However, this doesn’t mean itemizing isn’t the better choice for some people. If you had substantial deductible expenses in 2024, you might still benefit from itemizing.
Common Itemized Deductions
- Charitable Contributions – Cash donations are deductible up to 60% of adjusted gross income (AGI), while non-cash donations (like property) are limited to 30% of AGI. Excess donations can be carried forward.
- Medical Expenses – Only unreimbursed medical expenses that exceed 7.5% of AGI can be deducted.
- State and Local Taxes (SALT) – The maximum deduction is $10,000 (or $5,000 if married filing separately).
- Mortgage Interest – Interest on up to $750,000 of home acquisition debt is deductible. Home equity loan interest is only deductible if the loan was used to improve the home.
- Personal Casualty Losses – Only deductible if caused by a federally declared disaster and exceed 10% of AGI (after a $100-per-event reduction).
If your total itemized deductions exceed the standard deduction, it may be beneficial to itemize. However, not all deductions require you to make this choice.
Some expenses, known as above-the-line deductions, can be claimed regardless of whether you itemize or take the standard deduction. These deductions reduce your adjusted gross income (AGI), which can also help you qualify for other tax benefits.can
Understanding Above-the-Line Deductions
Unlike itemized deductions, above-the-line deductions are subtracted before calculating your AGI. These deductions lower your taxable income and apply whether you itemize or take the standard deduction. Some common above-the-line deductions include:
- Contributions to traditional IRAs and self-employed retirement plans
- Self-employed health insurance premiums
- 50% of self-employment tax
- Student loan interest (subject to an annual limit)
- Health Savings Account (HSA) contributions
- Certain alimony payments
- Penalties for early withdrawals from CDs or savings bonds
- Classroom expenses for educators (subject to an annual limit)
Because above-the-line deductions reduce your AGI, they can also help you qualify for additional tax benefits and credits.
Don’t assume that either the standard deduction option or the itemized deductions option is better. Do the math. Your tax preparer can do the math if you provide all the necessary paperwork. If you use a tax software program, such as Turbo Tax, it will do the math for you as well. After you enter all the necessary information, it will opt for the standard deduction if your itemized deductions don’t exceed it.
Note: The TCJA changes are set to expire after tax year 2025 (filed in 2026) unless Congress acts to extend them, so the option that is best for you now may change next year.