Itemized Deductions for Retirees: When Medical Expenses Make It Worth Itemizing

Take whichever is larger: the standard deduction, which is $16,100 for single filers and $32,200 for married couples filing jointly in 2026, or your total itemized deductions. Two changes make itemizing worth a fresh look this year — the SALT cap rose from $10,000 to $40,400, and taxpayers 65 and older can claim a separate $6,000 senior deduction whether they itemize or not.

Should you take the standard deduction or itemize?

When you file your federal income tax return, you must choose between two ways of deducting expenses from your taxable income: the standard deduction or itemized deductions (reported on Schedule A). You can't use both in the same year for the same return.

The math is simple: take whichever is larger. But getting there requires knowing what the standard deduction is, which of your expenses qualify for itemizing, and whether there's a smarter multi-year strategy available.

What is the standard deduction in 2026?

The standard deduction is a flat dollar amount the IRS allows every taxpayer to subtract from their income without needing to document any specific expenses. For tax year 2026 (returns filed in 2027), the amounts are:

Filing Status	Standard Deduction	Additional (Age 65+ or Blind)
Single	$16,100	+$2,050
Married Filing Jointly	$32,200	+$1,650 per qualifying spouse
Head of Household	$24,150	+$2,050
Married Filing Separately	$16,100	+$1,650

The 2017 Tax Cuts and Jobs Act roughly doubled the standard deduction from its pre-2018 levels, and legislation enacted in July 2025 made that structure permanent rather than letting it expire after 2025. As a result, the large majority of U.S. taxpayers — estimated at over 85% — claim the standard deduction, because their itemized deductions simply don't add up to more.

Separately, taxpayers aged 65 and older can claim a $6,000 senior deduction per qualifying person for tax years 2025 through 2028. It is available whether you itemize or take the standard deduction, and it phases out as modified adjusted gross income rises above $75,000 ($150,000 for joint filers).

What can you itemize?

If you choose to itemize, you report all eligible deductions individually on Schedule A. The main categories are:

• State and local taxes (SALT): Property taxes plus either state income tax or state sales tax — capped at $40,400 total per household in 2026.
• Mortgage interest: Interest on up to $750,000 in qualified mortgage debt on your primary and secondary residence (see IRS Publication 936).
• Charitable contributions: Cash donations (up to 60% of AGI) and non-cash donations like appreciated stock (up to 30% of AGI) to qualified organizations.
• Medical and dental expenses: Qualified expenses exceeding 7.5% of your Adjusted Gross Income (AGI). Only the excess above this floor is deductible — see IRS Publication 502 for what qualifies.
• Casualty and theft losses: Limited to losses from federally declared disasters.

Note what's not on this list: investment advisory fees, unreimbursed employee business expenses, and moving expenses remain non-deductible for most taxpayers.

When does itemizing make sense?

Itemizing is worth pursuing when your total qualifying expenses materially exceed the standard deduction. The most common scenarios where itemizing wins:

• You own a home in a high-cost area with a large mortgage — mortgage interest alone may push you over the threshold.
• You live in a high-tax state like California, New York, or New Jersey. With the SALT cap now at $40,400 rather than $10,000, state and local taxes alone can carry many households past the standard deduction — a reversal from the prior eight years.
• You had significant medical expenses in the year — a major surgery, cancer treatment, or long-term care — that push you well past 7.5% of AGI.
• You make large charitable contributions, especially in a high-income year.

What is deduction bunching?

For many taxpayers, itemized deductions hover just below the standard deduction — close but not quite enough to make itemizing worthwhile each year. The bunching strategy solves this by concentrating deductions into alternating years.

Here's how it works:

• Year 1 (Itemizing Year): Make two years' worth of charitable donations, prepay deductible expenses where allowed, and schedule elective medical procedures. Total itemized deductions exceed the standard deduction.
• Year 2 (Standard Deduction Year): Make no additional charitable contributions (you already gave to your Donor-Advised Fund last year). Take the full standard deduction.

Over two years, you claim more in total deductions than if you spread them evenly and took the standard deduction both years. The strategy works best when you have flexibility over the timing of your deductible expenses.

How do donor-advised funds help with bunching?

The biggest obstacle to charitable bunching is that you may not want to give double the amount to one charity in one year. A Donor-Advised Fund (DAF) solves this perfectly.

With a DAF, you contribute a large lump sum (say, two years of charitable giving) to the fund in Year 1 and take the immediate tax deduction. The money sits in the fund growing tax-free until you recommend grants to the specific charities of your choice — at whatever pace and schedule you like, even spread over many years.

The IRS sees the contribution to the DAF as the charitable deduction, not the distribution to individual charities. This lets you bundle the tax benefit into one year while distributing the charitable impact over time.

How does the SALT cap work?

The SALT deduction covers property taxes plus either state income tax or state sales tax. It was capped at $10,000 from 2018 through 2024 — a binding constraint for most homeowners in high-tax states. That cap rose sharply: it is $40,400 for 2026, indexed upward about 1% a year through 2029.

• The higher cap phases down for high earners. Above $505,000 of modified AGI in 2026, the cap falls by 30 cents per dollar of income over the threshold, but never below the old $10,000 floor.
• If your combined state income and property taxes were previously truncated at $10,000, recalculate. Households that had given up on itemizing may now clear the standard deduction on SALT alone.
• Layering mortgage interest and charitable giving on top of a $40,400 SALT deduction makes itemizing worthwhile for a much wider group than in prior years.

What deductions are specific to retirees?

Retirees often face unique dynamics in the standard vs. itemized deduction decision:

• The additional standard deduction for age 65+ raises the bar for itemizing. A married couple where both are 65 has a standard deduction of $35,500 in 2026 ($32,200 plus $1,650 each).
• The $6,000 senior deduction (2025–2028) applies on top, and unlike the additional standard deduction it survives even if you itemize — so it does not affect the itemize-or-not comparison, but it does lower your tax either way.
• Mortgage payoff in retirement eliminates mortgage interest as an itemized deduction, often pushing retirees firmly toward the standard deduction.
• Healthcare costs tend to rise in retirement, potentially generating large medical expense deductions in concentrated years.
• Qualified Charitable Distributions (QCDs) allow those 70½+ to donate directly from an IRA, reducing AGI rather than appearing as an itemized deduction — often more valuable since it works even when you take the standard deduction.

Because these interact, the itemize decision is best made alongside the rest of your tax picture: which bracket you land in, whether you are running Roth conversions, and what your broader tax plan calls for that year.