Standard Deduction or Itemized: Which to Choose on US Taxes

Choosing between the standard deduction and itemized deductions is one of the most impactful decisions when filing an income tax return in the United States. For those who have recently immigrated or are planning to move, understanding how each option works can mean a difference of hundreds or thousands of dollars in the final tax amount. The good news is that the concept is not complicated: it’s about deciding between a fixed deduction offered by the IRS or the individual sum of expenses you actually paid throughout the year.

The American tax system requires every tax resident to file an annual return with the Internal Revenue Service (IRS). In this return, the taxpayer subtracts deductions from their adjusted gross income (AGI) to arrive at taxable income. The way these deductions are calculated depends precisely on the choice between the standard and itemized methods. Both options are legitimate and available to any eligible taxpayer, but only one can be used per tax year.

What Is the Standard Deduction

The standard deduction is a fixed amount set annually by the IRS that the taxpayer subtracts from their AGI without needing to prove any specific expense. It exists to simplify the filing process: just select the option on the form and the deduction is applied automatically. The amount varies according to filing status, age, and whether the taxpayer or spouse is visually impaired.

For the 2026 tax year, the standard deduction amounts are:

Starting in 2026, taxpayers aged 65 or older receive an additional temporary bonus of $6,000 on top of the standard deduction ($12,000 if both spouses qualify). This benefit was introduced by the One, Big, Beautiful Bill and represents significant savings for retirees.

The standard deduction is chosen by approximately 90% of American taxpayers. It is especially advantageous for those who do not have many deductible expenses or prefer simplicity when filing.

What Are Itemized Deductions

Itemized deductions allow the taxpayer to add up specific expenses actually paid during the year and use this total as a deduction, provided the amount exceeds the standard deduction. To use them, you must fill out Schedule A of Form 1040 and keep supporting documentation for each expense.

The main categories of deductible expenses include:

• Mortgage interest on the primary residence (and, in some cases, a second home), limited to loans up to $750,000
• State and local taxes (SALT), including state income tax or sales tax (one or the other, not both) and property taxes
• Unreimbursed medical expenses that exceed 7.5% of AGI
• Charitable donations to IRS-qualified organizations (with limits that vary depending on the type of donation)
• Disaster losses in areas declared as federal disaster zones

Important Changes in 2026

The 2026 tax year brought relevant changes for those considering itemizing. The most significant is the increase in the SALT deduction cap, which jumped from $10,000 (the limit in effect since 2018) to $40,400. This new cap especially benefits taxpayers in high-tax states such as California, New York, and New Jersey. For incomes above $505,000 (MAGI), the limit begins to phase out at 30 cents per excess dollar, returning to the $10,000 floor for very high incomes.

This change may make itemized deductions more advantageous for a greater number of taxpayers, since the old $10,000 cap forced many to take the standard deduction even when their actual expenses were higher.

How to Choose the Best Option

The practical rule is straightforward: add up all your eligible expenses for itemized deductions. If the total exceeds the standard deduction amount for your filing status, itemizing is worthwhile. Otherwise, the standard deduction is the best choice.

Consider the following factors in your decision:

• Volume of deductible expenses: if you pay a mortgage, have high medical expenses, or make significant donations, itemized deductions may be advantageous
• State of residence: taxpayers in states with high income tax can now deduct up to $40,400 in SALT, which substantially changes the calculation
• Extraordinary events: buying a home, surgeries, natural disasters, or large donations in a specific year may make itemizing more advantageous temporarily
• Practicality: the standard deduction requires no documentation, while itemized deductions require organized records of each expense throughout the year

It is perfectly possible to alternate between the two options each tax year. There is no obligation to keep the same choice from one year to the next.

Considerations for Immigrants

For those who have recently arrived in the United States, some points deserve special attention. Tax residents in their first year often do not have a mortgage, large donations, or accumulated SALT expenses, making the standard deduction the natural option. However, certain immigration statuses can affect eligibility: nonresident aliens who file using Form 1040-NR generally cannot use the standard deduction and must itemize.

If you are married and file separately (Married Filing Separately), both spouses must use the same method. If one itemizes, the other must also itemize, even if the standard deduction would be more advantageous for them.

If you are unsure which method to adopt, a CPA (Certified Public Accountant) or qualified tax preparer can analyze your specific situation. Tax software such as TurboTax and H&R Block also automatically calculate which option yields greater savings; you just need to enter your expenses for comparison.

Victoria Harper

Editor-in-Chief

Meet the author

Leading journalism and editorial content at Visto n’ Visa, Victoria helps make immigration topics clear, trustworthy, and easy to understand. Her focus is on delivering useful, human, and relevant content for people exploring new paths abroad.