Optima Tax Relief’s Chief Tax Officer and Lead Tax Attorney, Phil, breaks down one of the most common tax questions taxpayers face: Should you itemize your deductions or take the standard deduction? The answer depends on your individual financial situation and whether your eligible expenses exceed the standard deduction amount.
Start with the Standard Deduction
Before considering itemized deductions, it’s important to understand the standard deduction. For many taxpayers, taking the standard deduction is the simpler and more beneficial option. The key is comparing your total deductible expenses to the standard deduction available for your filing status.
Common Itemized Deductions
When calculating itemized deductions, some of the most common categories include:
- Mortgage interest
- Charitable contributions
- State and local taxes paid (SALT) – $40,000 for 2025 and $40,400 for 2026 for most taxpayers
Note that starting in tax year 2026, you don’t have to itemize to benefit from charitable giving. Taxpayers who take the standard deduction can now deduct up to $1,000 (or $2,000 for joint filers) in charitable contributions. These expenses can add up quickly and may make itemizing worthwhile for certain taxpayers.
Don’t Forget About Medical Expenses
Medical expenses can also be included as an itemized deduction, but there is an important limitation. Only medical expenses that exceed 7.5% of your adjusted gross income (AGI) can be deducted. This threshold often makes medical deductions less beneficial than many taxpayers expect.
It May Not Be Too Late to Change Your Return
If you already filed and took the standard deduction, you may still have options. Taxpayers can generally amend their returns if they later determine that itemizing would have resulted in a better tax outcome. In most cases, an amended return can be filed within three years from the original due date of the return or two years from the date the tax was paid, whichever is later.
Understanding your deduction options can help ensure you’re not leaving valuable tax savings on the table.
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