Page 1: Understanding Deductions and Why They Matter
When tax season comes around, many people ask the same question: Should you itemize deductions if you live in a high-tax state? The answer can be a little tricky, but don’t worry—we’ll break it down in a simple way.
Let’s start with what a deduction is. A deduction helps lower the amount of money you pay taxes on. For example, if you earned $60,000 last year and you have $10,000 in deductions, you’ll only pay taxes on $50,000. This can save you a lot of money.
There are two main ways to take deductions:
- Standard Deduction – This is a fixed amount that the government lets you subtract from your income. In 2025, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly (these numbers may change based on inflation).
- Itemized Deductions – Instead of taking the standard amount, you can add up your actual expenses, like state taxes, medical bills, mortgage interest, and donations to charity.
So, should you itemize deductions if you live in a high-tax state? Well, it depends on how much you paid in taxes and other eligible expenses. High-tax states like California, New York, and New Jersey often mean you pay a lot in state income and property taxes. That could make itemizing the better choice—but there’s more to it.
Page 2: The $10,000 SALT Cap and How It Affects You
In 2018, a rule called the SALT cap went into effect. SALT stands for State and Local Taxes. This rule says you can only deduct up to $10,000 in state and local taxes on your federal return. This limit is still in place for 2025 unless Congress changes it.
Let’s say you paid $12,000 in state and property taxes. Even though you paid more, the IRS only lets you deduct $10,000 of that. So, should you itemize deductions if you live in a high-tax state? You’ll need to look at your total deductions, not just taxes.
Here are other things that count toward itemized deductions:
- Mortgage interest on your home
- Large medical bills (usually over 7.5% of your income)
- Charitable donations
- Some work-related expenses (limited)
If your total deductions (including the capped $10,000 for SALT) add up to more than the standard deduction, then it makes sense to itemize.
But if your itemized total is less than the standard deduction, it’s smarter to take the standard instead. This saves you time and often money, too.
Page 3: Making the Best Choice for Your Taxes in 2025
Here’s a simple way to think about it. Make a list of:
- How much you paid in state and property taxes (up to $10,000)
- Mortgage interest
- Medical bills
- Donations
Add them all together. Then compare that number to your standard deduction for 2025.
Should you itemize deductions if you live in a high-tax state? If your total is more than $14,600 (single) or $29,200 (married), then yes—itemizing is probably better. But if not, the standard deduction is your best bet.
Also, keep in mind:
- Some tax software can help you compare both options.
- If you own a home in a high-tax state, you’re more likely to benefit from itemizing.
- If Congress raises or removes the SALT cap in the future, that could change the math.
In the end, the answer to you should itemize deductions if you live in a high-tax state? depends on your personal situation. But now you have the tools to figure it out.
