Standard or Itemized? Your Autopilot Answer Just Expired
The SALT cap quadrupled and the charity rules changed on both ends. Check your math before December 31.
Every spring, millions of people make a five-figure decision in about four seconds. The tax software asks whether you want to itemize or take the standard deduction, and you click the button you clicked last year.
For seven years, that habit worked. A $10,000 cap on state and local taxes kept most households from ever beating the standard deduction, so you had no reason to look twice.
Back in July, I told you the refs rewrote the rulebook at halftime. I promised October would cover this play, and it’s the one most likely to cost you if you run it on autopilot.
The Number That Moved
The cap on state and local taxes, the SALT deduction, rose from $10,000 to $40,400 for 2026. It covers your state and local income tax plus your property tax, combined.
Put that next to the 2026 standard deduction: $16,100 if you file single, $24,150 as head of household, and $32,200 for married couples filing jointly.
Now picture a married couple in Baltimore County. They pay $14,000 in Maryland and county income tax, $6,500 in property tax, and $13,000 in mortgage interest. Under the old cap, they could count $10,000 of those taxes plus the interest, for $23,000. The standard deduction beat that by more than $9,000.
Under the new cap, they count all $20,500 of their taxes. Add the interest, and they reach $33,500. Give $3,000 to their church and the local food bank, and they land at $36,500. That puts $4,300 more in deductions on their return than the standard amount would, worth close to $950 in federal tax at the 22% bracket. They didn’t buy a bigger house or earn a raise. The rule changed under them.
Maryland adds one more reason to get this right. The state generally lets you itemize on your Maryland return only if you itemize on your federal return, so one choice drives both.
The Fine Print
I don’t sell fantasy, so here are the limits:
- High earners lose part of it. Once your modified income passes $505,000, the cap shrinks by 30 cents for each extra dollar. Around $606,000, you’re back at $10,000.
- It runs on a clock. The higher cap rises 1% a year through 2029, then drops to $10,000 for everyone in 2030.
- Married filing separately gets half. That’s $20,200 each.
Charity Changed on Both Ends
If you take the standard deduction, you get something new in 2026. You can deduct up to $1,000 in cash gifts to qualifying charities, or $2,000 on a joint return, without itemizing. Gifts to donor-advised funds don’t count, and you still need the receipt.
If you itemize, Congress added a floor. The IRS ignores the first 0.5% of your adjusted gross income in donations. A household earning $200,000 gets no deduction for its first $1,000 of giving. Taxpayers in the top 37% bracket face a second limit: their itemized deductions save them tax at 35%, not 37%.
So if your total sits near the standard deduction, try bunching. Give two years’ worth of donations in one year and itemize, then take the standard deduction the next year. You clear the floor in the big year and collect the full standard amount in the light one.
Your Homework Before Thanksgiving
- Pull your 2025 return and find whether you itemized. Check the deduction line on Form 1040.
- Add up 2026 so far: state income tax withheld from your pay stubs, your property tax bill, mortgage interest from your lender’s statement, and donations to date.
- Compare the total to your standard deduction. If you land within a few thousand dollars either way, you’re in bunching territory. Make your giving decision before December 31, because a gift in January counts for 2027.
You can’t change this answer in April. By then, the year is closed, and your accountant can only report what you did.
Your move: Hit reply with your rough totals and filing status, and I’ll tell you which side of the line you’re on. Next month, we move from deductions to the calendar: what changes when the 2027 filing season opens, and how to get to the front of the line.
