Decide in December: Should You Itemize This Year?
Winter weather and December busyness might have you yearning for the carefree days of spring. But remember that particular season also brings the dreaded reality of Tax Day. While April 15th seems a long way off, you can make moves now that could ease your stress later, reduce what you may owe, or even increase your refund.
To fully prepare your return, work with an experienced tax professional who can evaluate the nuances of your situation. For now, take a moment to review recent changes and actions you could take this month so you’ll be a step ahead when the sunny days of spring arrive.
Consider your choice: Take the standard deduction or itemize.
Adjustments to the standard deduction in 2017 meant itemizing no longer made sense for many homeowners.
The Tax Cuts and Jobs Act (TCJA) of 2017 nearly doubled the standard deduction taxpayers could claim. At the same time, it reduced the benefits for many homeowners, by capping how much they could deduct in state and local taxes (SALT) and mortgage interest.
The numbers bear that out. In 2017, the majority of taxpayers in five different income brackets itemized. By 2021, that was true only in the two highest brackets.[1] The overall itemization rate fell from 30.6% to 9.2% over the same period, with the steepest drops among taxpayers earning $25,000 to $200,000.[2]
For many, the math has changed.
With the passage of the One Big Beautiful Bill in 2025, the cap on SALT deductions rose from $10,000 to $40,000. Annual inflation adjustments have since pushed it to $40,400. Many homeowners, particularly those in high-tax states, may benefit from itemizing again, even though the standard deduction also increased.
Standard Tax Deductions [3]
| Pre-Tax Cuts and Jobs Act (2017) | After Tax Cuts and Jobs Act (2018) | One Big Beautiful Bill (2025) |
Single | $6,350 | $12,000 | $16,100 (2026) |
Married filing jointly | $12,700 | $24,000 | $32,200 (2026) |
Head of household | $9,350 | $18,000 | $24,150 (2026) |
State and Local Taxes (SALT) Deduction Cap [3]
Pre-Tax Cuts and Jobs Act (2017) | After Tax Cuts and Jobs Act (2018) | One Big Beautiful Bill (2025) |
No maximum | $10,000 | $40,400 (2026)* |
*The cap increases 1% annually and phases downward for taxpayers with incomes of $500,000 or more.
What does this mean for you?
Whether or not you itemized last year, it’s worth checking again to make sure your choice is still right for you. If you decide to claim more expenses, starting now will give you time to gather the extra documentation required. You might also want to adjust your year-end spending or charitable giving to get the most from your deductions.
Take stock of your home’s potential tax benefits.
Your tax professional will help you identify which of the dozens of available deductions will work for you. Before you chat, here are three home-related areas to be aware of:
Mortgage interest. A deduction may be available for interest paid on loans up to $750,000 (up to $1 million if purchased before 12/15/2017). If your loan is higher, you can still deduct the interest paid for the portion up to those limits.
You’ll see the biggest benefit of mortgage interest deductions in the early years of a fixed-rate loan, when interest payments are highest. For example, the first-year interest on a $350,000 30-year fixed rate loan at 6.5% is a bit less than $23,000. If you itemize and have an effective tax rate of 20%, that interest paid could save you up to $4,600 on your tax bill.
Home equity loan interest can qualify for a deduction, too, as long as the funds are spent on home improvements. If you have an open line of credit, you may still have time to increase this deduction by funding improvements before year-end. Check with your loan servicer to determine whether the interest will be applied before December 31.
Another way to boost your interest deduction this year is to make your January mortgage payment in December, so you write off an extra month’s interest. Keep in mind that this will reduce next year’s deduction unless you make another extra payment.
State and local taxes (SALT). The SALT cap increase came at a good time. Property taxes paid as part of a mortgage payment grew 7.4% in 2025, the second-largest driver of rising monthly mortgage payments, behind interest costs.[4]
If you stopped itemizing because of the previous limit, now is a good time to revisit that decision, particularly if you live in a high-tax state.
Vacation home. Mortgage interest on a second home can also be deductible, though the $750,000/$1 million limit applies across all properties. Similarly, the SALT cap remains $40,400 no matter how many homes you own. Please note that days of personal use vs. rental use can affect the deductible for vacation homes. If this applies to you, please talk to your tax advisor.
Bonus:
Work with your tax advisor to identify state and local tax benefits for homeowners. These benefits may not affect your decision to itemize, but they could provide meaningful tax savings. You may discover deductions or credits for energy improvements or accessibility upgrades, for example. Certain groups, like seniors or veterans, can sometimes claim property tax relief on their state income tax return.
Preparing for the next tax season may feel overwhelming in December. If it’s too much to manage right now, here’s one simple action you can take today: set a reminder to call your tax advisor the first week of next year. If you can manage one more task, consider whether tapping home equity for qualified home improvements or prepaying your mortgage before December 31 could strengthen your tax position.
Either way, entering the new year with a solid plan in place will offer peace of mind that carries through the holidays and protects the promise of spring.
We do not provide tax, legal, or accounting advice. Consult your tax professional regarding your individual circumstances.
Sources:
National Association of Home Builders Eye On Housing, “Federal Tax Return Itemization and the Mortgage Interest Deduction,” August 1, 2024.
Congressional Research Service, “Selected Issues in Tax Policy: The Mortgage Interest Deduction,” October 22, 2024.
Tax Policy Center, “How did the TCJA and OBBA change the standard deduction and itemized deductions?” September 2025.
ICE Mortgage Monitor, March 2026.