For nearly a decade, the “Standard Deduction” has been the undisputed king of tax season. Since the tax shifts in 2017, about 90% of Americans stopped tracking their receipts and simply took the standard deduction.
And honestly, that was the right move. The standard deduction was raised significantly, and the “SALT” (State and Local Tax) deduction was capped at just $10,000. If you lived in a high-tax state, that $10k cap acted as a ceiling that made itemizing almost impossible for most homeowners.
But as of December 31, 2025, that blueprint has officially changed.
The $40,000 Shift
For the 2025 tax year, the SALT deduction cap has moved from $10,000 to $40,000. This is a massive shift for anyone living in high-tax regions or anyone with significant property taxes.
Suddenly, the “10% who itemize” is likely going to grow back toward the 30% levels we saw years ago. Here is how you decide which side of the line you fall on.
The Math: Standard vs. Itemized
To know if you should pivot, you have to compare the 2025 Standard Deduction against your total “Itemized” expenses.
2025 Standard Deduction Benchmarks:
- Married Filing Jointly: ~$31,500
- Head of Household: ~$23,600
- Single: ~$15,750
A Real-World Example
Let’s look at a typical “Architect” scenario for a homeowner in a high-tax state. If you aren’t defaulting to the standard, your itemized list might look like this:
- State & Local Taxes (SALT): $25,000 (Now fully deductible under the new $40k cap).
- Charitable Contributions: $8,000
- Mortgage Interest: $5,000
- Total Itemized Deduction: $38,000
In this case, a married couple would be “leaving money on the table” if they took the $31,500 standard deduction. By itemizing, they reduce their taxable income by an additional $6,500.
Who Should Pay Attention?
This change doesn’t apply to everyone. The standard deduction is still “solid” and easier for many. However, you should definitely run the numbers with your accountant if:
- You live in a high-tax state (CT, NY, NJ, CA, etc.).
- You are a homeowner with significant property tax.
- Your total itemized expenses (Taxes + Interest + Charity) exceed your filing status benchmark.
Note: If your income exceeds $500,000 (or $250,000 if filing separately), these deductions may begin to phase down. Always consult your CPA for your specific limits.
The Bottom Line
The “Personal Finance Architect” approach is about avoiding defaults. For years, the default was the Standard Deduction. In 2025, the default is gone.
Taxes are one of the largest “leaks” in any financial foundation. By plugging that leak with a more strategic deduction choice, you keep more capital in your pocket to be deployed into future assets.
Don’t just hit “Submit” this year. Run both numbers.
Are you leaving money on the table?
For years, we were told to just take the “standard” move. But in 2025, the rules have changed. If you are a homeowner or live in a state with high property taxes, blindly hitting “Submit” could cost you thousands of dollars that should be in your pocket.
My goal is to help our community move from “defaulting” to “strategizing.” We work too hard for our money to let it leak out through old tax rules.
I’d love to hear from you in the comments:
Have you checked your property tax and SALT numbers yet for 2025?
What’s one tax “mystery” you wish someone would explain in plain English?
Drop a comment below. Let’s make sure we’re keeping as much of our ‘ard-earned capital as possible.
Manny Salce 