With the large federal standard deduction most people are no longer itemizing their tax deductions. Itemized deductions include, among a few other things, state taxes paid, mortgage interest, and charitable contributions.


In certain situations it can make sense to “stack” your itemized deductions and utilize the large standard deduction every other year.


Here is a simplified example:


NO STACKING                            Year 1                   Year 2

State Taxes                                $10,000                  $10,000

Mortgage Interest                       $6,000                    $6,000

Charitable Contributions             $8,000                    $8,000

Total Itemized Deductions         $24,000                  $24,000

Standard Deduction (MFJ)     $25,900                $27,700


YES STACKING                           Year 1                   Year 2

State Taxes                              $10,000                 $10,000

Mortgage Interest                     $6,000                  $6,000

Charitable Contributions           $16,000                $0

Total Itemized Deductions     $32,000                $16,000

Standard Deduction (MFJ)     $25,900               $27,700

In this example, the married filing joint couple would save ~$1,100 in Year 1 and then every other year (Year 3, 5, etc.) if they keep up the same stacking pattern! It takes a bit of work to develop a new rhythm to consistently stack your itemized deductions, but by using a Donor Advised Fund (which comes with other advantages, too!) making this slight tweak to your giving can reduce your income tax bill a bit every other year. For (a lot!) more detail on this stacking strategy check out this article.