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Two Ways to Reduce Your Tax Bill
When you file your taxes, you get to subtract either the standard deduction or your itemized deductions from your income. The right choice depends on your situation. This guide explains both options so you can pick the one that saves you more money.
Rates and figures as of May 2026.
What Is the Standard Deduction?
The standard deduction is a flat dollar amount the IRS lets you subtract from your income. You do not need receipts or documentation. You just take the deduction and move on.
For 2026 (taxes filed in 2027), the standard deduction amounts are:
- Single filers: $15,000
- Married filing jointly: $30,000
- Head of household: $22,500
If you are 65 or older, or blind, you get an extra amount added on top of these figures.
What Is Itemizing?
Itemizing means listing out your actual deductible expenses and adding them up. If the total is higher than the standard deduction, it is worth itemizing.
Common itemized deductions include:
- Mortgage interest (on loans up to $750,000)
- State and local taxes (SALT) — capped at $10,000
- Charitable donations
- Medical expenses above 7.5% of your income
The SALT Cap Limits Many Deductions
One big factor is the SALT cap. You can only deduct up to $10,000 in state and local taxes. This includes property taxes plus either state income tax or sales tax.
For people in high-tax states like California, New York, or New Jersey, this cap limits how much they can deduct. It makes itemizing less attractive than it used to be.
When Does Itemizing Beat the Standard Deduction?
You should itemize if your total deductible expenses add up to more than the standard deduction for your filing status.
Itemizing usually makes sense if you:
- Own a home with a large mortgage and pay a lot in mortgage interest
- Pay high property taxes and live in a high-tax state
- Make large charitable donations
- Had big out-of-pocket medical expenses
Most people, especially renters, do better with the standard deduction.
A Quick Decision Checklist
Run through this:
- Add up your mortgage interest paid in 2025.
- Add state/local taxes paid, up to $10,000.
- Add any charitable donations.
- Add medical expenses above 7.5% of your income.
- If that total beats your standard deduction amount, itemize. If not, take the standard deduction.
Tax software will usually run this calculation for you and recommend the better option.
If you get a refund after filing, put it to work. A high-yield savings account is a smart place to park it. If you have debt, the debt avalanche vs snowball calculator can help you build a payoff plan. And if you want to use your refund to start building wealth, read our guide on how to start investing with $100.
Frequently Asked Questions
Can I switch between the standard deduction and itemizing each year?
Yes. You choose which method to use each year when you file. There is no penalty for switching. Pick whichever saves you more money for that tax year.
What is the SALT deduction cap in 2026?
The SALT cap is $10,000 per household. This includes property taxes plus either state income taxes or sales taxes.
Do renters benefit from itemizing?
Usually not. Renters do not have mortgage interest or property tax deductions. Unless you make large charitable donations or have high medical expenses, the standard deduction is almost always better for renters.
What is the standard deduction for married couples in 2026?
For 2026, the standard deduction for married filing jointly is $30,000. This is the amount you subtract from your combined income before calculating how much tax you owe.