Standard vs Itemized Deductions: A Guide to Smarter Tax Decisions

Around this time of year, we’re often deep in collaborative conversations with clients and their accountants. These moments are opportunities to share ideas, ask thoughtful questions, and, most importantly, be great listeners on our clients’ behalf.

Far too often, tax decisions are made in isolation. We’ve long believed that a team-based, collaborative approach leads to better outcomes—and ultimately helps ensure that short-term decisions align with long-term financial goals.

What is the Standard Deduction?

The standard deduction is the IRS’s way of keeping taxes simple—it’s a flat amount you can subtract from your taxable income.

For 2024, the standard deduction is:

$14,600 for single filers
$29,200 for married couples filing jointly

No receipts. No calculations. Just an automatic reduction in your taxable income.

So why would anyone itemize?

What Does it Mean to Itemize?

Instead of taking the standard deduction, you can track and deduct specific expenses—but only if they add up to more than the standard amount.

For most high earners, only four categories of deductions really matter:

Medical & Dental Expenses – Only the portion that exceeds 7.5% of your adjusted gross income (AGI) counts.
Taxes Paid – This includes state and local income taxes + property taxes, but it’s capped at $10,000.
Mortgage Interest – Typically the largest deduction for homeowners.
Charitable Contributions – Every dollar donated to a qualified charity counts.

How to Decide: Standard or Itemized?

The math is simple:

If your total itemized deductions exceed the standard deduction, it may make the most sense to itemize.
If not, taking the standard deduction can be the better route.

This isn’t about “gaming the system”—it’s about understanding the rules and using them to your advantage.

A Smart Tax Strategy: “Bunching” Deductions

Most people assume they should itemize every year—but a smarter approach might be to alternate between taking the standard deduction and itemizing.

This is called bunching deductions, and it works by stacking deductible expenses into the same tax year to maximize their impact.

Here’s how you can do it:

Charitable Giving – Instead of donating the same amount yearly, double up in one year and take the standard deduction the next.
Property Taxes – Prepay property taxes when allowed to maximize deductions (but make sure they’ve been assessed first).
Medical Expenses – If you have elective procedures, schedule them strategically to exceed the 7.5% AGI threshold.

By planning ahead, you can reduce your overall tax burden over multiple years.

Timing Matters: The Biggest Mistake People Make

Too many people wait until April to figure this out—when it’s too late to adjust.

A simple proactive approach can help:

September – Quick check-in on potential deductions
December – Make strategic year-end moves
January – Finalize numbers with your tax pro
February – Make your itemized vs. standard deduction decision

A basic tracking system helps:

Keep a spreadsheet for the four main deduction categories
Save receipts in a dedicated folder
Set quarterly calendar reminders to check in

Looking Ahead to 2025: What’s Changing?

Two key changes could impact your strategy:

Standard Deduction Increase:

$15,000 for single filers
$30,000 for married couples

SALT (State and Local Tax) Cap Expiration:

The $10,000 deduction limit is scheduled to expire after 2025—this could impact whether you itemize.

Mark your calendar for a 2025 review to see how these changes affect you.

Final Thoughts

This isn’t tax advice—it’s a framework to help you understand why your CPA might recommend the standard or itemized deduction. If you’re unsure, talk to a tax professional who can assess your full financial picture.

Sources and References

IRS.gov –https://www.irs.gov/newsroom/deductions-for-individuals-the-difference-between-standard-and-itemized-deductions-and-what-they-mean

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