Module 1 · Tax Formulas and Credits · Lesson 4 of 10
Standard deduction or itemized deductions
How to choose, what can be itemized, and how to compare the two.
In this lesson · about 15 minutes
- Know the 2025 standard deduction for each filing status
- Name the main itemized deductions and their limits
- Decide whether a client should itemize, and say what it saves
The larger of a fixed amount based on filing status, or the total of itemized deductions such as mortgage interest, state and local taxes, medical expenses above 7.5% of AGI and charitable gifts.
Line 12 (Schedule A if itemizing)
After AGI, every taxpayer subtracts either the standard deduction or their itemized deductions, whichever is larger. Never both.
The standard deduction is a fixed amount that reduces the income you are taxed on. Think of it as tax-free income you keep before the rates apply to the rest. It depends on filing status, and is higher for people who are 65 or older or blind.
| Filing status (2025) | Standard deduction | Extra if 65+ or blind (each) |
|---|---|---|
| Single | $15,750 | $2,000 |
| Married filing jointly | $31,500 | $1,600 per spouse |
| Married filing separately | $15,750 | $1,600 |
| Head of household | $23,625 | $2,000 |
| Qualifying surviving spouse | $31,500 | $1,600 |
Itemized deductions, also called below-the-line deductions, are listed on Schedule A. The common ones:
- Mortgage interest on up to two homes (on up to $750,000 of loans taken after 2017)
- State and local taxes (SALT): state income tax or sales tax, plus property taxes. For 2025 the cap is $40,000 ($20,000 married filing separately), reduced for incomes over $500,000
- Property taxes on homes, and value-based fees on vehicles, such as part of California's vehicle registration (the VLF)
- Medical and dental expenses above 7.5% of AGI
- Charitable contributions to qualified organizations, in cash or property
Worked example
Rosa rents in Los Angeles and still itemizes
Rosa is single, rents her apartment and has an AGI of $95,000. She paid $6,200 in California income tax, gave $8,000 to her church and a food bank, and had $12,000 of unreimbursed medical bills after surgery.
Calculator
Standard or itemize?
Enter the client's AGI and possible itemized deductions. The tool applies the medical floor and the SALT cap and tells you which deduction wins.
Itemize. It deducts $3,325 more than the standard deduction and saves about $731.50 in federal tax.
Federal, tax year 2025, simplified for learning. Not tax advice.
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For learning only, not tax advice. Figures are federal for tax year 2025 and simplified; phase-outs and special rules are not all shown. Check current IRS instructions before preparing a return.