How did the 2025 IRS rules change for itemizing deductions vs. the standard deduction?
Executive summary
Congress passed the One, Big, Beautiful Bill (OBBBA) in mid‑2025, which made the Tax Cuts and Jobs Act (TCJA) changes to the standard deduction and many itemized rules permanent and added new carve‑outs — most notably raising the SALT cap and creating a new senior deduction of $6,000 for taxpayers 65+ that can be claimed whether or not they itemize [1] [2]. For 2025 the baseline standard deduction reported in guidance and tax commentary is $15,750 for single filers and $31,500 for married filing jointly, and most taxpayers continue to take the standard deduction rather than itemizing [3] [4].
1. A legislative reset: OBBBA made temporary TCJA rules permanent
The major change for 2025 is that OBBBA converted many temporary TCJA provisions into longer‑term law: the higher standard deduction levels that encouraged use of the standard deduction were extended and several itemized deduction limits were changed or restored in new forms — a key policy shift described by Tax Policy Center and IRS sources [1] [5].
2. Standard deduction amounts and who benefits
The practical effect for most filers is the enlarged standard deduction. Wipfli and other contemporaneous reporting list the 2025 standard deduction at $15,750 for single filers and $31,500 for married filing jointly, levels that make the standard deduction the better choice for the majority of taxpayers [3] [6]. The IRS continues to emphasize that taxpayers should choose the larger of the standard deduction or their Schedule A total [7] [8].
3. SALT: a big change for high state‑tax households
OBBBA dramatically altered the state and local tax (SALT) deduction by raising the cap for 2025 from the TCJA’s $10,000 limit to as much as $40,000 for many filers, but with a phaseout beginning at $500,000 of income and tapering to $10,000 for filers above $600,000, per Tax Policy Center reporting [1]. That change shifts the calculus for homeowners and high‑SALT taxpayers: taxpayers with substantial SALT, mortgage interest or charitable gifts may now find itemizing advantageous where they would not have under the old $10,000 limit [3] [1].
4. New senior deduction — applies even if you don’t itemize
OBBBA created a distinct $6,000 “senior” deduction for taxpayers 65 and older for 2025 through 2028. The IRS and tax shops stress this bonus can be taken by both itemizers and non‑itemizers, potentially altering decisions for older taxpayers who previously leaned on the standard deduction alone [2] [9]. H&R Block and IRS materials note the senior deduction phases down for higher incomes [9].
5. What stayed the same — the basic choose‑whichever‑is‑larger rule
Despite the legislative upheaval, the fundamental rule remains: taxpayers may claim either the standard deduction or the sum of itemized deductions — whichever yields the larger reduction in taxable income — and certain taxpayers are required to itemize regardless (e.g., married filing separately when the spouse itemizes) [7] [8]. IRS Topic 501 still frames the choice as a straightforward numerical comparison [8].
6. Who should re‑run the math for 2025
Taxpayers who previously took the standard deduction should reassess if they now have large SALT, mortgage interest, charitable gifts, or qualify for the senior deduction; several preparer guides explicitly recommend modeling both routes because the SALT cap increase and senior deduction change the breakeven point for itemizing [3] [1]. Conversely, many taxpayers — historically about 90% per tax analysts — will still find the standard deduction simpler and larger in practice [4].
7. Limitations, open questions and competing views
Available sources clearly document the SALT cap increase, the senior deduction, and permanence of TCJA‑era changes [1] [2]. What remains less detailed in these materials are long‑term behavioral effects, state responses, and how taxpayers at income phaseout thresholds will fare in complex mixes of deductions — available sources do not mention detailed empirical projections of those outcomes beyond the policy descriptions (not found in current reporting). Tax preparers and software vendors urge taxpayers to run both calculations for 2025 [6].
Bottom line: 2025’s rule changes did not erase the standard versus itemize choice — they shifted the arithmetic. The larger standard deduction still governs for most taxpayers, but the SALT cap increase and new senior deduction mean a meaningful subset of households should re‑compute before checking the standard deduction box [3] [1] [2].