The standard vs. itemized decision matters again.
Before the One Big Beautiful Bill Act was passed in July 2025, you probably had a quick answer. The $10,000 SALT cap made itemizing a losing proposition for most filers. But the rules shifted dramatically this year. The SALT cap quadrupled to $40,000, new senior deductions appeared, and the standard deduction amounts increased again.
For the 2025 tax year (returns filed in 2026), every client conversation about deductions requires fresh analysis. The shortcuts that worked last year no longer apply. If you're still running 2024 mental math, you're leaving money on the table for your clients.
This guide breaks down exactly what changed, when each method makes sense, and how to run the numbers efficiently during busy season.
Before diving into the details, here's how these two methods stack up against each other:
The fundamental rule: your client claims whichever method produces the larger deduction. They cannot claim both.
The standard deduction is a fixed dollar amount that reduces your client’s taxable income. No receipts required, no calculations needed. The IRS sets the amount based on filing status, and your client either qualifies or they don’t.
Think of it as a guaranteed deduction every taxpayer can claim simply for filing a return. The IRS essentially says, “We know you had some expenses this year. Instead of making you prove each one, here’s a flat amount you can subtract.”
For the 2025 tax year, here are the standard deduction amounts:
Taxpayers who are 65 or older or blind qualify for additional amounts on top of the base standard deduction:
A married couple where both spouses are 65 or older would add $3,200 to their base amount, bringing their total standard deduction to $34,700.
Here’s a provision many tax professionals missed in the OBBBA: a new bonus deduction for seniors that stacks on top of the existing additional amounts.
Taxpayers 65 or older can claim an extra $6,000 ($12,000 for married couples where both qualify) if their modified adjusted gross income falls below $75,000 for single filers, $150,000 for married filing jointly, or $112,500 for head of household. The deduction phases out at 6% of MAGI exceeding these thresholds, disappearing entirely at $175,000 (single) or $250,000 (joint).
This provision runs from 2025 through 2028. For qualifying clients, the numbers become substantial. Unlike the existing 65+ additional standard deduction, this new benefit is available to both itemizers and standard deduction filers.
Example: A married couple, both 66 years old, with MAGI of $140,000:
That’s a powerful number to beat with itemized deductions.
Itemized deductions work differently from the standard deduction. Instead of claiming a flat amount, your client tallies up qualifying expenses across several categories and deducts the total. More paperwork, but potentially more savings.
When a client itemizes, they list each deductible expense on Schedule A and attach it to their Form 1040. The IRS allows deductions in specific categories, each with its own rules and limits.
The SALT deduction covers state and local income taxes (or sales taxes if your client elects that option) plus property taxes. For years, the $10,000 cap made this deduction nearly irrelevant for high-tax-state clients.
The OBBBA raised the SALT cap to $40,000 for tax years 2025-2029, with married filing separately limited to $20,000. The cap also receives 1% annual indexing starting in 2026, reaching approximately $41,624 by 2029. This single change pushes many clients back into itemizing territory.
There’s a phase-down for higher earners. Once MAGI exceeds $500,000 (single or joint) or $250,000 (married filing separately), the cap is reduced by 30% of income over the threshold. The cap floors at the original $10,000 limit, meaning high-income taxpayers still get the pre-OBBBA deduction but lose the enhanced benefit. Phase-down thresholds also receive 1% annual indexing.
For a married couple with $550,000 MAGI in 2025, the calculation works like this: $40,000 cap minus (30% × $50,000 excess) equals a $25,000 effective cap. At $600,000 MAGI, the cap reaches its $10,000 floor. This creates what practitioners call the “SALT torpedo,” a zone between $500,000 and $600,000 where marginal tax rates spike artificially. Clients with MAGI approaching these thresholds need careful income timing analysis.
For clients below the phase-down, the expanded SALT cap is transformative. A California homeowner paying $25,000 in property taxes and $20,000 in state income tax was previously capped at $10,000. Now they can deduct the full $40,000.
Homeowners can deduct interest on acquisition debt up to $750,000 ($375,000 for married filing separately). The OBBBA made this limit permanent after it was previously scheduled to revert to the pre-TCJA limit of $1 million after 2025.
Interest on home equity debt remains non-deductible unless the funds were used to buy, build, or substantially improve the residence securing the loan.
Cash contributions to qualifying public charities remain deductible up to 60% of AGI. Appreciated property contributions are limited to 30% of AGI. The OBBBA made the 60% cash limit permanent.
Starting in 2026, a new 0.5% AGI floor applies to charitable deductions under Section 70425 of the OBBBA. Your clients will only deduct contributions exceeding this floor. For a client with $200,000 AGI making $10,000 in charitable contributions, only $9,000 is deductible because the first $1,000 (0.5% × $200,000) produces no tax benefit. Amounts below the floor do not carry forward. This makes 2025 the last year for full first-dollar charitable deductions.
Medical expenses exceeding 7.5% of AGI are deductible. The OBBBA made this threshold permanent, which is good news after years of uncertainty about potential increases to 10%.
For most clients, this deduction only kicks in during years with significant medical events. A client with $100,000 AGI needs more than $7,500 in unreimbursed medical expenses before any deduction applies.
Qualifying expenses include health insurance premiums (if not paid pre-tax), prescription medications, dental and vision care, long-term care premiums (subject to age-based limits), and transportation for medical purposes.
Personal casualty and theft losses remain limited to federally declared disaster areas. Your client cannot deduct losses from a house fire or car theft unless it occurred in a location where the President declared a major disaster. When deductible, losses are reduced by $100 per casualty and then by 10% of AGI.
A note on eliminated deductions: Several itemized deductions that existed before 2018 are gone permanently. The TCJA eliminated miscellaneous itemized deductions subject to the 2% AGI floor (investment advisory fees, tax preparation fees, unreimbursed employee expenses), moving expenses for anyone except active-duty military, and home equity interest unless used for home improvement. The OBBBA made these eliminations permanent, so if clients ask about these deductions, the answer is no.
Disadvantages:
The math is straightforward: your client should itemize when total itemized deductions exceed the standard deduction. The challenge is running that calculation efficiently for dozens of clients during busy season.
For a married couple filing jointly in 2025, the threshold to beat is $31,500. Here’s how to run the numbers:
If the sum exceeds the applicable standard deduction, itemize. If not, take the standard deduction.
Not every client needs a full calculation. For many, you can make a reasonable call based on their profile. Homeowners in high-tax states with mortgages almost always benefit from itemizing now that the SALT cap has expanded.
Renters in states without income tax rarely accumulate enough deductions to exceed the standard amount. Seniors who qualify for the bonus deduction face an unusually high bar because their standard deduction can reach $46,700 or more.
The table below summarizes common scenarios:
Understanding when to itemize becomes clearer through real examples. These scenarios show how the analysis plays out for different client profiles. When you need to verify specific thresholds or confirm the rules mid-return, Bizora can pull the citation-backed answer in seconds so you're not digging through IRS publications.
Profile: Married couple, both 55, MAGI of $280,000, homeowners in San Francisco
Their numbers:
Here’s Bizora’s output for this scenario:
So, you can see that your itemized deductions (88.1k) far exceed the standard deduction (31.5k), so it’s recommended you itemize.
The SALT cap doesn’t bind beyond your 40k total in 2026, mortgage interest is fully within the 750k cap, and charity is reduced only by the 0.5% floor.
Profile: Married couple, both 68, MAGI of $85,000, renters in Texas (no state income tax)
Their numbers:
Here’s Bizora’s output for this scenario:
For this scenario, standard deduction is recommended as it exceeds their itemized total by over $30,000.
Profile: Single filer, 45, MAGI of $550,000, homeowner in New York City
Their numbers:
Here’s Bizora’s output for this scenario:
Now, for this scenario, the recommended deduction is the standard deduction.
With all these scenarios, you can see how having citation-backed research at your fingertips matters. Bizora AI backs each answer it gives you with citations.
So, when you're advising a client to time income around phase-down thresholds, you can confidently use it to help with researching underlying rules that may have otherwise taken hours to find.
While preparing 2025 returns, keep these upcoming changes on your radar for client conversations about future planning.
The new 0.5% AGI floor means clients will only deduct charitable contributions exceeding that threshold starting next year. Communicate this change now so clients can adjust their 2025 giving strategies accordingly. For clients who give consistently each year, bunching contributions into 2025 helps avoid losing the first-dollar deduction across multiple years of gifts.
Starting in 2026, the OBBBA adds a new wrinkle for top-bracket taxpayers. A reduction formula effectively caps the benefit of itemized deductions at roughly 35% instead of the full 37%, with SALT deductions hit harder than other categories. The exact calculation depends on how far income exceeds the top-bracket threshold. Worth digging into the statutory details before advising high-income clients on timing strategies.
The enhanced $40,000 SALT cap runs through 2029 with 1% annual indexing, then reverts to $10,000 in 2030. Clients should understand this is a five-year window, not a permanent change. The income-based phase-down also disappears in 2030, meaning all taxpayers, regardless of income, will be limited to $10,000. Long-term planning may need adjustment as 2029 approaches.
Expect continued inflation adjustments to standard deduction amounts each year. The IRS typically announces the following year's figures each fall. For 2026, standard deductions are already set: $16,100 (single), $32,200 (MFJ), $24,150 (HOH).
The standard vs. itemized deduction decision looks different in 2025 than it has in years. The quadrupled SALT cap, new senior deductions, and permanent thresholds create opportunities your clients didn't have before.
Don't assume last year's answer applies this year. Run the numbers for each client. The clients who benefited from the standard deduction for the past seven years may now come out ahead by itemizing. The reverse is true for seniors newly qualifying for the bonus deduction.
When you need to verify deduction limits or confirm the rules during busy season, Bizora delivers citation-backed answers in seconds. Your clients are counting on you to find every legitimate deduction, and the rules have changed enough that old assumptions need testing.
For the 2025 tax year (returns filed in 2026), the standard deduction is $15,750 for single filers, $31,500 for married filing jointly, $23,625 for head of household, and $15,750 for married filing separately. Additional amounts apply for taxpayers who are 65 or older or who are blind.
Take whichever produces the larger deduction. Add up your itemized deductions including SALT (capped at $40,000 for 2025), mortgage interest, charitable contributions, and medical expenses above 7.5% of AGI. If the total exceeds your standard deduction amount, itemize. If not, take the standard deduction.
No. You must choose one method or the other for each tax year. You cannot claim both the standard deduction and itemized deductions on the same return. However, you can switch between methods from year to year based on which produces the better result.
Several deductions eliminated by the Tax Cuts and Jobs Act remain permanently unavailable: miscellaneous itemized deductions subject to the 2% AGI floor (including tax preparation fees, investment advisory fees, and unreimbursed employee expenses), moving expenses (except for active-duty military), and home equity loan interest unless the funds were used for home improvement.
Homeowners can deduct mortgage interest on acquisition debt up to $750,000 ($375,000 for married filing separately). The OBBBA made this limit permanent. Interest on home equity debt is only deductible if the funds were used to buy, build, or substantially improve the home securing the loan.
Add up your potential itemized deductions: SALT (up to $40,000), mortgage interest, charitable contributions, and medical expenses above 7.5% of AGI. Compare this total to the standard deduction for your filing status. Choose whichever amount is larger.