Standard Deduction vs. Itemized Deductions

Every filer must choose one path. The standard deduction is a fixed dollar amount based on filing status — for tax year 2025, it is $15,000 for single filers, $30,000 for married filing jointly, and $22,500 for head of household. Itemized deductions, reported on Schedule A, allow taxpayers to deduct specific expenses such as state and local taxes (SALT), mortgage interest, charitable contributions, and certain medical costs. Taxpayers should choose whichever method produces the larger deduction.

When Itemizing Makes Sense for NYC Filers

New York City residents face a combined state and city income tax rate that can exceed 12%, which means SALT deductions can be substantial. Even with the $10,000 SALT cap imposed by the Tax Cuts and Jobs Act, many high-income households in Manhattan, Brooklyn, and the surrounding boroughs find that mortgage interest on a primary residence plus charitable giving plus the capped SALT deduction exceeds the standard deduction. Real estate professionals, business owners, and high-net-worth individuals often benefit from itemizing, particularly when large charitable contributions or significant mortgage balances are involved.

Special Rules and Situations

• Dependents — A taxpayer claimed as a dependent on another return has a limited standard deduction, generally the greater of $1,300 or earned income plus $450
• Age and blindness — Filers who are 65 or older or blind receive an additional standard deduction amount ($1,600 for single, $1,300 for married)
• Married filing separately — If one spouse itemizes, the other must also itemize, even if the standard deduction would be larger
• Nonresident aliens — Generally required to itemize and cannot claim the standard deduction

Bunching Strategy

One planning technique The Reed Corporation frequently recommends is deduction bunching. By concentrating charitable contributions and other timing-flexible expenses into alternating years, a taxpayer can itemize in the bunching year and take the standard deduction in the off year. This approach can produce a higher total deduction over a two-year period than claiming the standard deduction both years. Donor-advised funds are a popular vehicle for executing this strategy, allowing the taxpayer to take the full charitable deduction in the contribution year while distributing grants to charities over time.