Every year, taxpayers face the same decision when filing: take the standard deduction, or itemize? For most people it comes down to one comparison, but getting that comparison right can meaningfully change what you owe. With updated deduction figures now in place for the 2026 tax year, filed in 2027, this is a good time to review your options and choose deliberately rather than by habit. As always, this article is educational, and we recommend speaking with a tax professional about your specific situation before making a final decision.
Understanding Your Tax Filing Options
When you file your federal return, there are two ways to reduce your taxable income. You can take the standard deduction, a fixed dollar amount the IRS sets based on your filing status, or you can itemize, which means adding up specific expenses you actually paid during the year. Both approaches lower the income the IRS taxes. The difference lies in how you get there and how much you may end up deducting.
Many taxpayers stick with the standard deduction because there's nothing to document and nothing to calculate. But homeowners, high earners, and anyone with significant medical bills or charitable giving might find itemizing puts more money back in their pocket. Understanding both options lets you choose with confidence instead of guessing, and our individual income tax services team works with clients throughout Chicagoland to help make that determination each year.
What Is the Standard Deduction?
The standard deduction is a flat amount subtracted from your gross income before your tax bill is calculated. The IRS adjusts it annually for inflation, so the figure shifts slightly each year. There are no receipts and no records to keep. You simply select it on your return, and it reduces your taxable income automatically.
Current Standard Deduction Amounts
For the 2026 tax year, the amounts are $16,100 for Single or Married Filing Separately, $32,200 for Married Filing Jointly, and $24,150 for Head of Household. Taxpayers who are 65 or older, or legally blind, may claim an additional amount on top of these figures, which can make the standard deduction even more attractive for older filers. These figures adjust for inflation annually, so it's worth confirming the current-year amounts each filing season.
Separately, the OBBBA introduced a new deduction of up to $6,000 per qualifying taxpayer age 65 or older, available for tax years 2025 through 2028. This is distinct from the additional standard deduction above, and it can be claimed whether you take the standard deduction or itemize. The benefit phases out for higher incomes, beginning at $75,000 of modified AGI for single filers and $150,000 for married couples filing jointly, so not every older taxpayer will qualify for the full amount.
Who Benefits Most From Taking It
The standard deduction tends to work best for taxpayers without many deductible expenses, or whose expenses don't exceed the fixed amount. If you rent your home, live in a lower-tax area, don't carry heavy out-of-pocket medical costs, and give modestly to charity, the standard deduction will often outperform itemizing.
It also suits anyone who'd rather skip the paperwork, since there are no forms to attach and no receipts to track down. For many filers, that simplicity alone makes the decision straightforward. Taxpayers who take the standard deduction in 2026 can still deduct up to $1,000 (Single) or $2,000 (Married Filing Jointly) in charitable donations without itemizing, an option worth keeping in mind. This deduction applies only to cash gifts made directly to qualifying public charities, and contributions to donor-advised funds do not qualify.
What Does Itemizing Deductions Involve?
Itemizing means forgoing the fixed standard deduction in favor of deducting your actual expenses for the year. Instead of one preset figure, you total eligible costs and subtract that amount from your income. If the total exceeds the standard deduction for your filing status, itemizing could be the better financial choice.
The tradeoff is the additional effort involved. You'll need to identify qualifying expenses, gather documentation, and complete Schedule A of Form 1040. For some filers, that effort pays off. For others, the math simply doesn't support it.
Common Itemizable Expenses
Several expense categories may qualify:
- Mortgage interest, including points, particularly valuable for homeowners early in a large loan. Qualified mortgage insurance premiums also become deductible starting in 2026, though the deduction phases out quickly above $100,000 of AGI and disappears entirely at $110,000, so it reaches a narrower group of homeowners.
- State and local taxes (SALT), including income, sales, and real property taxes, capped at $40,400 for 2026, a consideration that matters for many homeowners across the North Shore given Illinois property tax levels. This higher cap phases down for higher earners, reducing by 30% of the amount your modified AGI exceeds $500,000 and returning to $10,000 once modified AGI reaches roughly $600,000. The expanded cap is also temporary and is scheduled to revert to $10,000 in 2030 unless Congress acts.
- Charitable contributions to qualifying organizations, with cash gifts to public charities generally deductible up to 60% of AGI, though for itemizers only the portion of contributions exceeding 0.5% of AGI is deductible beginning in 2026.
- Unreimbursed medical and dental expenses exceeding 7.5% of your AGI.
- Casualty or theft losses connected to federally declared disasters.
The medical expense threshold means only unusually high costs help most filers, but for someone facing a serious illness or major healthcare bills, this deduction can add up meaningfully.
What No Longer Qualifies
It's also worth knowing what no longer qualifies. The OBBBA permanently eliminated most miscellaneous itemized deductions, including things like unreimbursed employee business expenses, investment management fees, and tax preparation costs. These were suspended under the 2017 tax law, and that suspension is now permanent, so they cannot be itemized in 2026 or beyond.
Recordkeeping Requirements for Itemizing
Claiming itemized deductions means documenting every expense you report throughout the year, including mortgage interest statements, property tax bills, charitable receipts, and medical invoices. Depending on what you're claiming, bank records, canceled checks, and acknowledgment letters from charities may also come into play.
That's a real commitment requiring discipline and organization all year, not just a scramble at tax time. Some taxpayers manage this comfortably. For others, the standard deduction feels more practical, even if it means potentially leaving some savings on the table.
Standard Deduction vs. Itemizing: Key Differences
Factor | Standard Deduction | Itemizing |
Amount | Fixed amount based on filing status | Varies based on actual qualifying expenses |
Documentation | None required | Receipts, statements, and records required |
Complexity | Simple, no forms needed | Requires Schedule A and detailed tracking |
Audit Risk | Minimal, nothing to substantiate | Slightly higher, since claims must be substantiated |
Best For | Renters, modest expenses, simplicity | Homeowners, high SALT or charitable giving, major medical costs |
With the standard deduction, you know your number before you even start your return. Itemizing is different: the final figure depends on how your year played out financially and whether you kept the records to back up each claim. If your finances vary significantly from year to year, that unpredictability is worth factoring into your planning.
How to Decide Which Option Saves You More
The decision comes down to one comparison: are your eligible itemized expenses greater than your standard deduction? Whichever figure is higher generally results in a lower tax bill, though we always recommend confirming with a tax professional before filing.
A good starting point is a rough estimate of your potential itemized deductions using the categories above. If that estimate lands close to or above your standard deduction threshold, it's worth calculating the full numbers before you file. Our income tax team regularly helps clients run this comparison as part of broader year-round tax planning.
Situations That Favor the Standard Deduction
Renters and younger filers without significant assets usually come out ahead with the standard deduction, as do taxpayers whose finances are fairly modest and straightforward. The same applies to those who don't give heavily to charity or live in lower-tax states. If tracking expenses throughout the year isn't appealing, the standard deduction removes that burden while still delivering meaningful tax relief.
Situations That Favor Itemizing
Homeowners carrying large mortgages often benefit from itemizing, since mortgage interest alone can be substantial. Taxpayers in high-tax states, including many in Illinois, may find their SALT deductions, even with the cap, push their total past the standard deduction line. Anyone who made a major charitable gift or faced significant medical bills during the year should run the numbers before assuming the standard deduction is automatically better.
Life changes can shift the calculation too. Major surgery, purchasing a home, or an unusually generous year of giving might make itemizing worthwhile even for someone who has taken the standard deduction for years.
Strategies to Maximize Your Tax Savings
For taxpayers hovering near the standard deduction threshold, a few strategies could help improve your outcome:
- Bunching charitable donations by concentrating two or more years of giving into a single tax year to push itemized totals above the threshold, then taking the standard deduction the following year.
- Reviewing your exposure to the SALT cap to understand how much of your state and local tax burden is deductible.
- Using the above-the-line charitable deduction available to standard deduction filers, up to $1,000 (Single) or $2,000 (Married Filing Jointly), for cash gifts made directly to qualifying public charities rather than donor-advised funds. Note that these amounts are fixed and are not adjusted for inflation.
- Tracking medical expenses against the 7.5% AGI threshold, particularly if you anticipate a year with elevated healthcare costs.
Timing matters for many of these strategies. If you have healthcare expenses on the horizon or are weighing a significant charitable gift, coordinating the timing with your broader financial picture can help maximize the potential value of your deductions. A tax professional can test these strategies against your actual numbers and may spot opportunities a simple side-by-side comparison would miss.
Why Work With Pasquesi Sheppard on Your Tax Strategy
Tax decisions rarely stand alone. Choosing between the standard deduction and itemizing often ties into your income sources, your investment activity, and your estate planning. That's where a firm like ours can help.
Based in Lake Forest, Illinois, Pasquesi Sheppard has served closely held private businesses, high-net-worth individuals and families, and nonprofit organizations for more than 50 years. Every client works directly with a partner as their primary contact, which means informed guidance from someone who understands your full financial picture, not just your tax return. For high-net-worth families managing more complex financial lives, our family office services provide planning that extends well beyond an annual return.
Schedule a Consultation to Plan Your Best Filing Approach
If you're unsure whether the standard deduction or itemizing fits your 2026 return, the best next step is a direct conversation with a tax professional who knows your situation. Small shifts in your financial picture can tip the decision either way, and planning ahead of filing season can help you feel confident in your approach.
We welcome individuals and families across Chicagoland looking for clear, personalized tax guidance. Contact us to schedule a consultation and build a filing approach shaped around your actual circumstances.
This article is for general educational purposes only and reflects tax rules current as of the publication date, which are subject to change. It is not tax advice. Consult Pasquesi Sheppard before deciding on your 2026 return.
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