Tax season always drops us at the same crossroads: Do I just grab the standard deduction, or do I slog through itemizing?
In 2025, thanks to the One Big Beautiful Bill Act (OBBBA), that decision feels trickier than ever. The standard deduction jumped higher, which sounds fantastic on paper, but some of the usual itemized write-offs got trimmed or capped.
Here’s the thing: for some people, it’s a no-brainer. But if you’re a homeowner—especially in a high-cost state—you can’t just check the “easy box” and move on. Ignoring itemized deductions in 2025 could mean you’re quietly handing the IRS extra money.
What’s the Standard Deduction This Year?
Let’s start with the baseline. For 2025, the IRS set the standard deduction at:
- Single: $15,750
- Married filing jointly: $31,500
- Head of household: $23,625
For millions of taxpayers, these numbers settle the question. If your itemized deductions don’t climb past those amounts, the standard deduction is faster, simpler, and cleaner.
But—and this is a big but—if you own a home with a sizable mortgage or steep property taxes, those numbers might not be enough.
Hard Truth #1: Mortgage Interest Is Still Capped
The OBBBA left the mortgage interest deduction alone, and the cap remains:
- Deductible interest only applies to the first $750,000 of acquisition debt ($375,000 if you’re married filing separately).
That means if you took out a $1 million loan recently, only the first $750K of interest payments count toward deductions. The rest? Tough luck.
Now, let’s be real. If you’re in Oklahoma with a $220K mortgage, this won’t touch you. But in San Francisco or Manhattan? Different story.
Hard Truth #2: Grandfathered Mortgages Still Rule
Here’s where it gets interesting. If your mortgage was taken out before December 16, 2017, under a contract signed by December 15, you’re “grandfathered.”
Translation: you can still deduct interest on up to $1 million of mortgage debt ($500K if filing separately). Even refinancing doesn’t erase that perk, as long as you don’t borrow more than the old balance.
I’ve seen clients keep thousands in deductions alive just because of timing. Check your loan paperwork—you might be one of the lucky ones.
For the IRS’s official language, dig into Publication 936.
Hard Truth #3: Mortgage Insurance Premiums Are Coming Back—Sort Of
This one confuses people. Starting in 2026, you’ll once again be able to deduct mortgage insurance premiums (PMI or MIP).
Sounds great, right? Not so fast. There’s an income cap. Once your adjusted gross income (AGI) hits $100,000 ($50,000 if married filing separately), the deduction starts shrinking. At $110,000, it’s gone entirely.
So yes, this could help first-time buyers or middle-income homeowners. But if you’re earning six figures and up, don’t count on it.
Hard Truth #4: Property Taxes and SALT Deductions Matter Again
The SALT deduction (state and local taxes) has been a hot-button issue for years. The OBBBA raised the cap, which means homeowners in places like New Jersey, New York, or California can finally deduct more of their sky-high property taxes.
If you’re paying $15K or more in property taxes each year, this alone could make itemizing in 2025 worth the hassle.
The IRS put together a handy FAQ on SALT rules.
Hard Truth #5: Home Equity Loans Aren’t What They Used to Be
Another common trip-up: home equity loan interest. You can still deduct it, but only if the loan was used to buy, build, or improve your home.
That means no deductions for using a HELOC to cover credit cards, medical bills, or a new truck. The IRS watches this one closely. If you’re not sure, double-check the fine print with Schedule A.
Hard Truth #6: Itemizing Takes Time—But Sometimes Pays
Here’s the part nobody likes to admit. Itemizing isn’t quick. It takes receipts, statements, and patience. But if you’re a homeowner in a pricey market, skipping it could mean losing out on thousands in deductions.
For example:
- A California couple with a grandfathered $900K mortgage and $18K in property taxes almost always beats the standard deduction.
- A Texas homeowner with a $220K loan and low taxes? Not a chance.
This is why running the numbers both ways is essential.
Hard Truth #7: The Rules Keep Shifting
The OBBBA isn’t the last tax law we’ll see this decade. Congress tweaks these rules every few years, and the IRS updates its guidance constantly. If you’re not keeping an eye on updates—or working with someone who does—you risk missing deductions you’re legally entitled to.
That’s why firms like IRSProb exist. They track the constant changes so you don’t have to.
Quick Recap for Tax Savings
- Standard deduction 2025: $15,750 (single), $31,500 (married), $23,625 (HOH).
- Mortgage interest: capped at $750K unless grandfathered.
- Mortgage insurance: deductible starting 2026, phased out at $100K AGI.
- Property taxes: SALT cap raised, helps homeowners in high-tax states.
- Home equity interest: only deductible if used for improvements.
- Bottom line: for many, the standard deduction wins. But for certain homeowners, itemizing in 2025 is the smarter play.
Common Questions on Itemized Deductions 2025
Itemized Deductions in 2025
- The standard deduction is higher than ever.
- Mortgage interest is capped at $750K, unless grandfathered.
- Property taxes matter more with the raised SALT limit.
- PMI comes back in 2026 for middle-income filers.
- Most people will take the standard deduction. High-cost homeowners? Itemize and compare.
Where to Get Help
If your eyes glazed over halfway through this, you’re not alone. Tax law is messy on purpose. But that’s where we step in. At IRSProb, we help homeowners and taxpayers figure out whether itemized deductions in 2025 are worth the effort—or if the standard deduction already saves them more.
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