Standard Deduction vs. Schedule A: Which Should You Use?
Deciding how to reduce your taxable income is a crucial step. Learn how to compare a fixed deduction amount against your specific expenses to make the right choice.
When filing your annual income tax return, you face a choice that directly affects your tax liability: whether to take the standard deduction or to itemize deductions. The standard deduction is a fixed dollar amount you can subtract from your income. Itemizing involves adding up various individual expenses on a form called Schedule A to arrive at a total deduction.
Understanding the Standard Deduction
The standard deduction simplifies tax filing by providing a predetermined deduction amount, eliminating the need for most taxpayers to track numerous expenses. This fixed amount is based on your filing status, age, and whether you or your spouse are blind. The Internal Revenue Service (IRS) adjusts these amounts annually for inflation. For the 2025 tax year, the standard deduction for single filers and those married filing separately is $15,000, for married couples filing jointly it is $30,000, and for heads of household, it is $22,500.
Taxpayers who are age 65 or older or are legally blind are entitled to an additional standard deduction amount. This increases the total standard deduction. For 2025, the additional amount for a single filer or head of household is $2,000. For married individuals, the additional amount is $1,600 for each qualifying spouse.
Certain taxpayers are not permitted to use the standard deduction and must itemize. This group includes a married individual filing a separate return whose spouse itemizes deductions. It also applies to individuals who file a return for a period of less than 12 months because of a change in their accounting period and nonresident or dual-status aliens during the year, with some exceptions.
Exploring Itemized Deductions on Schedule A
Itemized deductions are specific expenses that can be subtracted from your adjusted gross income (AGI) to lower your taxable income. These are reported on Schedule A (Form 1040), Itemized Deductions. If the total of your itemized deductions is greater than your standard deduction amount, it is advantageous to itemize.
Medical and Dental Expenses
You can deduct the amount of medical and dental expenses that is more than 7.5% of your AGI. This includes payments for the diagnosis, cure, or treatment of disease. Qualifying expenses can include payments to doctors and dentists, as well as costs for equipment, supplies, and diagnostic devices.
State and Local Taxes (SALT)
Taxpayers who itemize can deduct certain state and local taxes they have paid. This includes state and local income taxes or, alternatively, state and local general sales taxes, but you cannot deduct both. The deduction also covers state and local real estate taxes and personal property taxes. However, the total deduction for all state and local taxes is capped at $10,000 per household, or $5,000 for a married person filing a separate return.
Home Mortgage Interest
Interest paid on a home mortgage can be a deduction. Taxpayers can deduct home mortgage interest on up to $750,000 of acquisition indebtedness for their main home or a second home. For married taxpayers filing separately, this limit is $375,000. Acquisition debt is a mortgage you took out to buy, build, or substantially improve your home.
Gifts to Charity
Contributions made to qualified charitable organizations can be deducted. For cash contributions, you can deduct up to 60% of your AGI. For non-cash contributions of property, the rules are more complex, with deduction limits from 20% to 50% of AGI depending on the property and organization. It is important to maintain records, such as bank statements or written acknowledgments from the charity, to substantiate your donations.
Casualty and Theft Losses
A deduction for personal casualty and theft losses is available only for losses attributable to a federally declared disaster. To be deductible, the loss must exceed $100 per casualty, and the total of all your casualty losses for the year must exceed 10% of your AGI. This limitation narrows the circumstances under which these losses can be claimed.
Making the Choice and Claiming Your Deduction
The decision to itemize or take the standard deduction comes down to a comparison. Add up all your potential itemized deductions, including medical expenses, state and local taxes, mortgage interest, and charitable gifts. Once you have this total, compare it to the standard deduction for your filing status. This comparison will determine which method results in a lower tax liability.
If the Standard Deduction is Higher
If your standard deduction is more than your total itemized deductions, the process is straightforward. You will not file Schedule A. Instead, you will enter the standard deduction amount for your filing status directly on your Form 1040, U.S. Individual Income Tax Return.
If Itemized Deductions are Higher
Should your total itemized deductions exceed your standard deduction, you will need to complete and file Schedule A. On this form, you will list each of your deductions and calculate the total. This completed Schedule A must be attached to your Form 1040, and the total is entered on the form to reduce your taxable income.