Changes to Tax Deductions for Individual Taxpayers
Beginning with the 2025 and 2026 calendar years, many significant changes to individual income tax laws will take effect, creating both opportunities and considerations for taxpayers.
Beginning with 2025, more individual taxpayers will be able to itemize deductions, rather than relying solely on the standard deduction. Thanks, in large part, to the increased SALT deduction.
You may recall, individual taxpayers may deduct the greater of the standard deduction or the total of all itemized deductions. Itemized deductions include medical, property tax, state and local income tax, mortgage interest, charitable donations, gambling losses, and casualty or theft losses.
What should you be thinking about now in light of these changes to 2025 and 2026 tax deduction laws?
Accelerate charitable giving: Ultra-high-income taxpayers may benefit from making larger donations in 2025 vs. 2026 to maximize tax savings.
Bunch deductions: Consider timing deductible expenses (e.g., medical, property taxes, charitable gifts) every other year to exceed the standard deduction threshold.
Review mortgage and charitable strategies: If you can now itemize, evaluate the tax benefits of maintaining or increasing mortgage interest payments and charitable contributions.
Manage adjusted gross income (AGI): Use tax-loss harvesting, retirement contributions, deferred compensation, or business asset purchases to keep AGI in ranges that avoid deduction phase-outs (e.g. senior, charitable, SALT deductions).
Charitable donations from IRAs: Evaluate the tax impact of giving directly from IRA accounts, which may satisfy RMDs while reducing taxable income.
Business versus personal deductions: If limited by the SALT cap, consider whether certain state income taxes can be paid by a business and deducted there instead of personally.
Do a tax projection: Run a year-end projection to see which strategies will maximize deductions and minimize tax liability.
Because of the likelihood that more individual taxpayers will benefit from itemizing deductions, we are providing this chart below summarizing some of the law changes to individual income tax deductions, and how they may impact your total tax.
2025–2026 Standard and Itemized Deduction Changes
| Category | Old Law (Through 2024) | New Law (Starting 2025/2026) | Planning Notes |
| SALT (State & Local Tax) Deduction Cap | $10,000 cap ($5,000 if MFS) | Increases to $40,000 (Single & MFJ), $20,000 (MFS) as indexed, through 2029 | Helps taxpayers in high-tax states; more likely to itemize now Phaseouts start at $500,000 (Single/MFJ) |
| Standard Deduction | 2024: $14,600 (Single), $29,200 (MFJ) | 2025: $15,750 (Single), $31,500 (MFJ), indexed | Actual deduction is the greater of standard deduction or itemized dedn. |
| Extra Standard Deduction for Senior 65+ | $1,950 (Single), $3,100 (MFJ) | Continues/indexed; 2025 amounts $2,000 (Single) $3,200 (MFJ) | In addition to new $6,000 senior deduction, if applicable |
| Senior Bonus Deduction 65+ | None | $6,000 per taxpayer age 65+ (phases out: Single $75k–$175k; MFJ $150k–$250k) | 2025–2028 only; in addition to standard or itemized deductions |
| Charitable Contribution Deduction Limit | Cash gifts to public charities limited to 60% of AGI | Cash gifts: 60% of AGI for itemizers. Non-itemizers (2026+): $1,000 (Single)/$2,000 (MFJ) above-the-line deduction; 0.5% AGI floor applies; high-income taxpayers limited to 35% value | Encourages larger gifts; more taxpayers benefit; donor-advised funds not eligible for non-itemizer deduction; phaseouts reduce benefit for high-income taxpayers |
| Charitable Deduction Timing Rules | Deduction allowed only if itemizing | Same, except for the 2026+ $1,000/$2,000 | More donors benefit; “bunching” strategy may optimize deductions |
| Charitable Carryforward | 5-year carryforward allowed | 5-year carryforward unchanged | Donations above AGI limits can still be carried forward |
| High-Income Itemized Deduction Limitation | None | Value of itemized deductions reduced for top-bracket filers (37%); capped at 35% tax benefit starting 2026 | Reduces tax savings for high-income taxpayers in the 37% bracket |
| Miscellaneous 2% Itemized Deductions | None | Permanently disallowed | No 1040 deduction for most personal legal, tax, trustee, and investment advisory fees, etc. |
| Medical Expense Deduction Threshold | 7.5% of AGI | Unchanged | Still allowed if you itemize and exceed threshold |
| Mortgage Interest Deduction | Interest on up to $750,000 of acquisition debt (Pre-2018 loans may be grandfathered as $ 1 Million) | No change | Same limits; home equity interest still limited |
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