Because of the higher standard deduction, many taxpayers no longer itemize and that can mean missing out on potential savings. One strategy to consider is deduction “bunching,” which involves intentionally grouping deductible expenses into a single tax year to exceed the standard deduction and unlock greater tax relief.

Because this approach is most effective when used over a multiple-year time span, coordination is key. An Ameriprise financial advisor can help assess your situation and work alongside your tax professional to identify deduction opportunities.

Here’s an overview of what deduction bunching is and when it may make sense for you.

What is deduction bunching?

Deduction bunching is a tax filing strategy that involves concentrating eligible deductible expenses, such as charitable donations, into a single tax year to maximize itemized deductions. The ultimate goal is to generate larger tax savings by strategically timing when deductions are claimed.

How does deduction bunching work?

Deduction bunching is most effective when it’s employed with a multi-year time horizon in mind. The strategy works by alternating between itemizing deductions and taking the standard deduction across different tax years. In all cases, itemized deductions need to be accurately timed and substantiated. For example:

• In years where you have higher deductible expenses, you consolidate deductions together to exceed the standard deduction threshold and itemize.
• In years when your deductible expenses are lower, you take the standard deduction.
• Over time, this back‑and‑forth approach may help reduce your total taxes across multiple years.

For example, if you file as a single taxpayer and incur $10,000 in deductible expenses annually, spreading those expenses evenly over two years may keep you below the current standard deduction limit both years (depending on your filing status and the year’s standard deduction). However, by bunching two years’ worth of deductible expenses into a single year, you may surpass the standard deduction threshold, itemize your deductions for that year and lower your taxable income.¹ In the following year, you would take the standard deduction, potentially reducing the overall taxes owed over the two-year period.

Why has bunching tax deductions become more relevant?

Deduction bunching has become increasingly relevant as changes to the tax landscape have altered how many taxpayers benefit from itemized deductions. Several developments have contributed to this shift:

• Higher standard deductions: Changes to the tax code significantly increased the standard deduction, simplifying filing for many people but also making it harder for taxpayers to exceed the threshold needed to itemize.
• Limits and adjustments to certain deductions: Changes to how state and local tax (SALT) deductions are treated have also affected itemizing strategies. For example, recent legislation temporarily raised the federal deduction limit for SALT from $10,000 to $40,000 with a phaseout in place for those who earn over a certain income threshold. This cap is scheduled to revert to the prior $10,000 limit in 2030, providing a brief window of opportunity for taxpayers to take advantage of the expanded deduction.

Learn more: The state and local tax (SALT) deduction, explained

What types of itemized deductions work well for bunching?

Certain deductions are particularly well‑suited for a bunching strategy, especially those you can control in terms of timing or amount. Common examples include:

• Charitable contributions: Donations² are among the easiest deductions to bunch because you have significant flexibility over when and how much you give. For example, if you typically donate a set amount annually, you could plan to combine multiple years of contributions into a single year, potentially allowing you to surpass the standard deduction for that year.
• Medical expenses: Health care costs are deductible only when they exceed 7.5% of your adjusted gross income. By scheduling elective procedures, dental work or other qualifying expenses in the same year, you may increase the likelihood of surpassing this threshold and benefiting from a larger deduction.
• SALT deductions: Prepaying property taxes (if assessed and paid in the same tax year) or other qualifying state and local taxes can also help you exceed the standard deduction threshold.

Coordinating deductions across all three of these areas, where possible, can help you maximize itemized deductions.

Learn more: How new charitable giving rules could affect your taxes

When should I consider bunching tax deductions?

Bunching your deductions may be particularly beneficial to you if:

• Your itemized deductions are close to exceeding the standard deduction threshold.
• You have control over the timing of your charitable contributions.
• Your deductible expenses are predictable or controllable every year.
• You’re planning major deductible expenditures, such as medical procedures or dental work.
• You want to maximize your tax efficiency over multiple years.

How can I maximize my deduction bunching?

There are a few ways you can maximize your deductions with this strategy:

• Plan out your tax filing strategy in advance: Timing is critical with deduction bunching, so it’s essential to proactively plan your tax filing strategy for the current year and beyond. This allows you to identify bunching opportunities, strategically time expenses years in advance and decide which years to claim the standard deduction versus itemized deductions.
• Consolidate charitable giving into a single year: If charitable giving is a priority, consolidating several years’ worth of contributions into a single year can be a strategic way to maximize your tax benefits. By doing so, you may exceed the standard deduction threshold, allowing you to claim itemized deductions and make a greater impact with your giving.
• Use a donor-advised fund (DAF) to drip out charitable donations: A DAF is a charitable giving account that allows you to contribute assets and recommend grants to qualified charities. With this vehicle, you could make a single, tax-deductible contribution in the year of your choice and recommend that the sponsoring organization distribute the funds over time.³ This approach not only simplifies the logistics of giving, but also allows you to plan your charitable contributions in a way that aligns with your financial goals and philanthropic priorities.

Turn your tax deductions into opportunities

While tax bunching can help boost your tax savings, it requires careful planning to execute properly. An Ameriprise financial advisor can help you determine if this strategy makes sense for you and work with your tax professional to help execute it.