Choosing between the standard deduction and itemizing your deductions is a key tax decision each year. While the standard deduction is simpler, itemizing can save you more money if your deductible expenses add up. Here are 5 common scenarios where itemizing your deductions makes sense for the 2025 tax year.
1. You Own a Home with a Mortgage
Mortgage interest is one of the largest deductible expenses for many taxpayers. If you paid significant interest on a qualified mortgage in 2025, itemizing on Schedule A can reduce your taxable income substantially.
- You can deduct interest on loans up to $750,000 ($375,000 if married filing separately).
- Points paid at closing and certain mortgage insurance premiums may also be deductible.
Example: You paid $8,000 in mortgage interest and $1,000 in mortgage insurance premiums. Taking the itemized deduction may be better than the $15,750 standard deduction.
2. You Had High Medical and Dental Expenses
If your unreimbursed medical and dental expenses exceed 7.5% of your Adjusted Gross Income (AGI), itemizing allows you to deduct the excess.
- Eligible expenses include doctor visits, surgeries, prescriptions, dental care, eyeglasses, hearing aids, and some travel costs for medical care.
- Insurance premiums paid out-of-pocket may qualify as well.
Example: With an AGI of $50,000, expenses over $3,750 are deductible. If you had $6,000 in expenses, you can deduct $2,250.
3. You Paid Significant State and Local Taxes (SALT)
State and local income taxes or sales taxes, plus property taxes, are deductible up to a combined cap of $10,000 ($5,000 if married filing separately).
- If you live in a high-tax state, itemizing may offer a larger deduction than the standard deduction.
- The SALT cap was raised to $40,000 in 2025 for many taxpayers under new legislation, which can further benefit itemizers.
Example: You paid $7,000 in state income taxes and $6,000 in property taxes. You can deduct up to the $10,000 limit.
4. You Made Charitable Contributions
Donations to qualified charities are deductible when you itemize.
- Cash donations can generally be deducted up to 60% of your AGI.
- Non-cash donations such as clothing or household items require you to keep records and may need appraisals.
- Out-of-pocket expenses related to volunteering can also be deductible.
Example: You donated $3,000 in cash and $500 worth of goods. These can add up to a meaningful itemized deduction.
5. You Experienced Casualty or Theft Losses
Losses from federally declared disasters can be deductible after subtracting $100 per event and 10% of your AGI.
- This deduction is more common after hurricanes, floods, wildfires, or other qualifying events.
- Documentation and proof of loss are essential.
Example: You suffered $12,000 in disaster-related losses with a $60,000 AGI. Deductible amount = $12,000 − $100 − $6,000 (10% AGI) = $5,900.
Additional Tips
- Compare your total itemized deductions with your standard deduction to see which yields greater tax savings.
- Keep thorough records and receipts for all deductions.
- Consider consulting a tax professional if your deductions are complex.
Conclusion
Itemizing deductions can lead to significant tax savings if your deductible expenses exceed the standard deduction for your filing status. Homeowners, those with large medical bills, high state taxes, charitable giving, or casualty losses should especially consider itemizing in 2025.
Have questions about your particular situation? Share your details, and we can help determine whether itemizing is right for you!
