Choosing between the standard deduction and itemizing can change your tax bill. Most people take the standard deduction because it is simple. But homeowners, high property taxpayers, and big givers often save more by itemizing.
The “One Big Beautiful Bill Act” (OBBBA), signed July 4, 2025, made this choice worth revisiting. It raised the standard deduction and increased the SALT cap for some taxpayers.
If you live or work in Virginia, Maryland, or Washington, D.C., state tax planning matters. Higher local taxes and property taxes can push you toward itemizing.
What Is the Standard Deduction
The standard deduction is a fixed amount the IRS lets you subtract from income. You do not need receipts for it. You choose it when it is larger than your itemized total.
OBBBA raised the 2025 standard deduction to $15,750 (Single/MFS), $23,625 (HOH), and $31,500 (MFJ/QSS). For 2026, the IRS lists $16,100 (Single/MFS), $24,150 (HOH), and $32,200 (MFJ/QSS).
There is also a new extra $6,000 deduction for many seniors age 65+ for 2025–2028, with an income-based phaseout. This can make the standard deduction even more attractive.
2025 vs. 2026 Standard Deduction (Federal)
| Filing status | 2025 standard deduction | 2026 standard deduction |
|---|---|---|
| Single | $15,750 | $16,100 |
| Married Filing Separately | $15,750 | $16,100 |
| Head of Household | $23,625 | $24,150 |
| Married Filing Jointly | $31,500 | $32,200 |
| Qualifying Surviving Spouse | $31,500 | $32,200 |
What Are Itemized Deductions
Itemizing means listing eligible expenses on Schedule A. Common ones include mortgage interest, charitable gifts, and state and local taxes (SALT). Itemizing takes more time, but it can save real money when your total is high.
For many small business owners, itemizing is most common when you own a home and pay high property taxes. Large charitable giving can also tip the scale. Medical expenses can help in certain years, too.
A simple rule: if your itemized total is higher than your standard deduction, itemize. If not, take the standard deduction. Most tax software runs both options.
OBBBA Changes That Can Affect Itemizing
OBBBA temporarily increased the SALT cap to $40,000 for many taxpayers from 2025–2029, with a phase-down starting around $500,000 MAGI. That can make itemizing more valuable again for some households.
This matters in high-tax areas and for homeowners with big property tax bills. It can also matter for W-2 earners who do not have business-level SALT strategies available.
At the same time, the higher standard deduction still pulls many taxpayers away from itemizing. The best move depends on your totals, not your guess.
Where PTET Fits In for Business Owners
PTET is a state election that lets certain pass-through businesses pay state income tax at the entity level. The IRS has said these entity-level state taxes can reduce federal taxable income and are not limited by the individual SALT cap rules.
That is why PTET can still help even if you take the standard deduction. The deduction happens on the business return, not on Schedule A.
Example (simple): A Virginia S-Corp elects PTET and pays state tax at the entity level. The business deducts it, which can lower the owner’s federal income. The owner may still take the standard deduction personally. (PTET rules vary by state, so results depend on your facts.)
Quick Examples for VA, MD, and D.C.
Example 1 (itemizing may help): You own a home in Northern Virginia, pay high property taxes, and give to charity. With the higher SALT cap, your Schedule A total may beat the standard deduction.
Example 2 (standard may win): You rent in D.C., have moderate state taxes, and limited deductions. The standard deduction is often larger and simpler.
Example 3 (PTET matters): You own an S-Corp or partnership with meaningful state income tax. PTET may create a federal deduction at the business level, even if you do not itemize.
Simple Checklist: Standard or Itemized
Add up potential itemized deductions: SALT (up to the cap), mortgage interest, and charitable gifts. Compare that total to your standard deduction for your filing status.
If you own a pass-through business, also ask: “Does PTET apply in my state and my entity type?” Then model taxes with and without PTET.
