If your itemized deductions barely exceed the standard deduction threshold, you might not be getting the full tax benefit from your deductible expenses. That’s where bunching deductions comes in. This strategy involves concentrating eligible expenses like charitable donations and elective medical costs into a single tax year, allowing you to itemize in that year and claim the standard deduction in the next—creating a powerful two-year tax-saving cycle.
📘 What Is Bunching?
Bunching refers to strategically timing your deductible expenses so that you exceed the standard deduction in one year (thus making itemizing worthwhile), and then minimizing those expenses the following year to take the standard deduction instead. This is ideal for taxpayers who fall near the itemizing threshold.
📊 2025 Standard Deduction Thresholds
- Single: $15,750
- Married Filing Jointly: $31,500
- Head of Household: $23,300
If your typical annual deductions are close to these limits, you may benefit from bunching every other year to surpass them.
📌 Best Expenses to Bunch
- Charitable Contributions: Donate two or more years’ worth in one calendar year (e.g., December 2025 and January 2026 donations made both in December 2025).
- Elective Medical Expenses: Schedule surgeries, dental work, or vision correction procedures in one tax year.
- State and Local Taxes (SALT): Prepay property taxes or state estimated taxes, keeping in mind the $10,000 cap (or temporary increases if applicable in 2025).
- Mortgage Interest: If you make 13 payments in a year instead of 12, you may increase deductible interest.
💡 Example: Bunching Strategy in Action
Sarah and David typically donate $12,000 to charity, pay $8,000 in state taxes, and $5,000 in mortgage interest annually—a total of $25,000 in itemizable deductions. That’s below their $31,500 standard deduction for 2025. If they bunch two years of donations into 2025 (donating $24,000 instead of $12,000), their itemized deductions jump to $37,000—making itemizing worthwhile that year. In 2026, they take the standard deduction and skip new donations.
🧾 Documentation Tips
- For charitable gifts, ensure you have dated receipts and acknowledgment letters.
- Confirm prepayments (e.g., property tax or medical bills) are paid and posted by December 31 of the tax year.
- Track medical expenses against the 7.5% AGI threshold for deductibility.
⚠️ Limitations and Caveats
- The SALT deduction is capped at $10,000 per return; prepaying above this won’t help federally.
- Medical expenses are only deductible to the extent they exceed 7.5% of AGI, so bunching helps only if you have substantial costs.
- Bunching may not benefit those already far above or far below the itemizing threshold annually.
🛠️ Tools to Help Plan
- Use a tax projection tool or software to simulate itemizing vs. standard deduction over a two-year span.
- Maintain a spreadsheet of expenses and donation planning per year.
- Speak with a tax professional to optimize the strategy based on income fluctuations or expected expenses.
✅ Summary
Bunching deductions is a savvy tax strategy that allows you to maximize your itemized deductions every other year, especially if you’re on the cusp of the standard deduction threshold. By timing expenses like charitable contributions and elective medical treatments, you can lower your taxable income in select years and still benefit from the standard deduction in others.
Want a personalized bunching schedule based on your giving or medical plans? Share your typical deductions and filing status, and we’ll help you plan the optimal approach.
