Itemizing is Back: 2025 Tax Law Changes That Could Save You Money
The New Tax Bill took effect on July 4, 2025, and with it comes a fresh wave of tax law changes that affect deductions, credits, and overall tax planning.
One of the biggest changes: itemizing deductions is back on the table.
For years after the 2017 Tax Cuts and Jobs Act (TCJA), most taxpayers stopped tracking deductions like property taxes, mortgage interest, and charitable gifts because the standard deduction was higher and many itemized deductions were limited. Now, OBBBA expands several key deductions, so it’s time to revisit whether itemizing could reduce your tax bill.
To give you a sense of how these rules may play out, here are three sample scenarios. They illustrate when itemizing is worth it—and when the standard deduction might still be the better choice.
Key Takeaways:
Þ Itemizing is back: Higher SALT limits mean itemizing may beat the standard deduction for many households.
Þ Give in 2025: Charitable gifts are most valuable before the new 0.5% AGI hurdle starts in 2026.
Þ Student loans: Tax-free forgiveness ends after 2025.
Þ Extra deductions: Includes 20% QBI deduction, a new senior deduction, temporary car loan interest deduction, and higher retirement plan contribution limits.
Scenario 1: Married Filing Jointly
Income: $400,000 – One Child – Business Owner
Standard Deduction (2025)
$31,500
Itemized Deductions -New tax laws highlighted in bold.
SALT-State and local taxes- (i.e. property tax):
$40,000 cap (no phase-out until $500,000 AGI)
Charitable Donations:
2025: Donations-Fully deductible up to 60% of AGI
2026+: Deductible only above 0.5% of AGI- see example end of memo.
Tip: Make larger gifts in 2025-consider a Donor Advised Fund
Mortgage Insurance Premiums: Starts in 2026
Mortgage Interest: Deduct interest on the first $750,000 of mortgage debt.
Medical: Deductible above 7.5% of AGI
When to Itemize:
If you have close to $40,000 in SALT plus a mortgage and/or charitable giving, itemizing most likely beats the $31,500 standard deduction.
Additional Deductions available off your taxable income whether you itemize or not:
20% Qualified Business Income deduction.
Personal Car loan interest deduction: For purchases of cars (made in America) in years 2025-2028 -Up to $10,000 (phase-out starts at $300,000 AGI)
Charitable Contribution up to $2,000
Child Tax Credit - $2,200
Scenario 2: Single Filer, Age 65+
Income: $100,000
Standard Deductions (2025)
$15,750
65 years plus: $2,000 Deduction
New senior deduction: +$6,000 (phase-out begins at $75K MAGI and is fully phased out at $175K)
Estimated total deduction: $23,750 depending on the exact phase-out calculation.
Itemized Deductions:
· Same as Scenario 1 above.
Additional Deductions available off your taxable income whether you itemize or not:
Personal Car loan interest deduction: Up to $10,000 For purchases of cars in years 2025-2028 (made in America) - (phase-out starts at $150,000 AGI)
Charitable Contribution up to $1,000
Tips: up to $25,000 (Phase out begins at $150,000)
Overtime Pay: up to $12,500 (Phase out begins at $150,000)
When Itemizing Beats Standard Deduction
At $100,000 AGI, you will typically choose itemizing if:
You own a home with a mortgage,
Pay substantial property taxes, and/or
Have high medical costs or charitable giving.
If your itemized total is less than roughly $23,000, the standard deduction remains better.
Scenario 3: Single filer-W-2 Employee
Income: $150,000 – No Children
Standard Deduction (2025)
$15,750
When to Itemize:
Most will benefit from the standard deduction unless:
You own a home
Pay substantial mortgage interest and state/local taxes
Additional Deductions available off your taxable income whether you itemize or not:
Personal Car loan interest deduction: Up to $10,000 For purchases of cars in years 2025-2028 (made in America) - (phase-out starts at $150,000 AGI)
Charitable Contribution up to $1,000
Tips: up to $25,000 (Phase out begins at $150,000)
Overtime Pay: up to $12,500 (Phase out begins at $150,000)
Action Steps
Consider tracking deductible expenses starting in 2025 through 2028.
Front-load charitable giving in 2025 before the 0.5% hurdle begins.
Take advantage of expiring credits:
EV and rooftop solar credits expire end of 2025
A Final Word
These tax scenarios only scratch the surface. There are many more tax law changes that could affect your individual situation, along with countless combinations of income, deductions, family circumstances, and business structures that can change how these new rules will apply.
If these changes have you wondering how they’ll affect you, let’s talk. I’d be happy to walk you through the rules, review your options, and help you make a plan that takes full advantage of the opportunities ahead.
Schedule your complimentary 30-minute consultation HERE.
Spotlight: New Charitable Deduction Example: 2025 Vs. 2026
Income of $200,000
2025
Gift of $10,000 → Receive full $10,000 deduction
2026 – 0.5% hurdle rate:
Income $200,000 multiplied by 0.5% = $1,000 floor amount.
Gift of $10,000 (must subtract floor amount) $1,000 = $9,000 Deduction.
Key Terms:
· AGI (Adjusted Gross Income):
Your total income from all sources minus specific adjustments (such as retirement contributions and student loan interest) but before standard or itemized deductions.
· QBI (Qualified Business Income):
Income from certain pass‑through businesses (e.g., sole proprietorships, S‑corps, partnerships) that may qualify for a 20% federal tax deduction.
