The Tax Cuts and Jobs Act changed the rules in 2018. It nearly doubled the standard deduction. At the same time, it capped the state and local tax deduction. This shift forced many taxpayers to choose the standard path. They saw lower bills. They kept doing it.
Now, the landscape has shifted again.
For years, itemizing felt like a losing battle. The numbers just didn’t add up for most people. But that was then. This is now.
If you haven’t checked your strategy since 2017, you might be leaving money on the table. The old rule no longer applies. New deduction limits are in place. Inflation adjustments are changing the game.
How do you know which method saves you more money now? The answer isn’t static. It changes every year.
The Standard Deduction Has Grown
Let’s look at the numbers. In 2023, the standard deduction for single filers was $13,850. For married couples filing jointly, it jumped to $27,700.
These figures are higher than recent years. They are higher than the 2018 baseline for many.
This means the bar for itemizing has moved up. You need more deductible expenses to beat the standard amount.
SALT Capping Still Hurts
The state and local tax deduction remains capped at $10,000. This limit affects millions of homeowners.
High-tax states like California, New York, and New Jersey feel this pinch hardest. Residents pay more in state income or property taxes. The cap restricts their ability to reduce federal taxable income.
This is a permanent change. It doesn’t go away with inflation. It stays at $10,000.
When Itemizing Makes Sense
Itemizing still works for some. It works when your deductions exceed the standard amount.
Common itemized deductions include:
- Mortgage interest
- Charitable contributions
- Medical expenses over 7.5% of adjusted gross income
If you have a large mortgage, donate heavily, or face high medical costs, itemizing might win. But for most, the standard deduction is simpler and more valuable.
The Inflation Adjustment Factor
Tax brackets and deductions adjust for inflation. This happens annually.
In 2024, the standard deduction for singles is $14,600. Married couples filing jointly get $29,200.
This increase matters. It raises the threshold. More people will likely choose the standard deduction this year.
How to Decide
You don’t have to guess. You can calculate.
- List your potential itemized deductions.
- Compare the total to the standard deduction for your filing status.
- Choose the higher number.
Most tax software does this automatically. It tests both paths. It shows you the difference.
But don’t assume the software knows your full picture. Some deductions are easy to miss. Charitable gifts to non-cash charities. Casualty losses. Unreimbursed employee expenses (though these are limited post-2018).
The Hidden Costs of Itemizing
Itemizing takes time. It requires receipts. It demands record-keeping.
