Finding legitimate ways to reduce your tax burden can save you a lot of money over time. One effective approach that can be put to use is itemized deduction bunching. This strategy can potentially save significant money by timing when you report itemized deductions. In this article, we’ll explain how itemized deduction bunching works, who can benefit most, and how to put this strategy into action.
Table of Contents
- What Is Itemized Deduction Bunching?
- How Itemized Deduction Bunching Works
- Who Benefits Most from This Strategy?
- Common Expenses to Consider for Bunching
- Implementing Bunching with Donor-Advised Funds
- Tax Planning Considerations
- Conclusion
What Is Itemized Deduction Bunching?
Itemized deduction bunching means concentrating deductible expenses into specific tax years to maximize their impact. Instead of incurring deductible expenses evenly across multiple years, you “bunch” them together so that in certain years, your itemized deductions exceed the standard deduction threshold, allowing you to itemize and receive greater tax benefits.
This strategy became much more relevant after the Tax Cuts and Jobs Act of 2017, which nearly doubled the standard deduction while limiting certain itemized deductions. This change made it harder for many taxpayers to benefit from itemizing every year.
How Itemized Deduction Bunching Works
The concept is straightforward but requires planning. Here’s how it works:
- Determine your itemized deduction strategy– Analyze which itemized expenses you plan to incur and when you plan to incur them. If the total of two years of itemized deductions sum to be more than the standard deduction, this may be a good strategy.
- Choose your “bunch” years: Decide which tax years you’ll concentrate deductions into.
- Concentrate deductions: In your “bunch” years, pay for as many deductible expenses as possible. This might include making two years’ worth of charitable donations in one year or timing medical expenses to incur them in years which will bring your total itemized deductions above the standard deduction limit.
- Take the standard deduction in off years: In the years when you’re not bunching, take the standard deduction.
Let’s look at two scenarios to see the tax impact of bunching versus not bunching over four years:
Scenario 1: Married Couple Filing Jointly (37% Tax Bracket)
This couple has $33,000 in potential itemized deductions each year ($10,000 SALT, $8,000 mortgage interest, $15,000 charitable giving).
| Year 1 | Year 2 | Year 3 | Year 4 | 4-Year Total | |
|---|---|---|---|---|---|
| Without Bunching | $33,000 (Itemized) |
$33,000 (Itemized) |
$33,000 (Itemized) |
$33,000 (Itemized) |
$132,000 in deductions |
| With Bunching | $48,000 (Itemized) $33,000 regular + $15,000 advanced |
$30,000 (Standard) |
$48,000 (Itemized) $33,000 regular + $15,000 advanced |
$30,000 (Standard) |
$156,000 in deductions |
| Tax Savings from Bunching | Additional deductions: $24,000 | $8,880 tax savings (at 37% tax rate) |
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As these scenarios demonstrate, bunching creates meaningful tax savings over a four-year period by allowing you to itemize more deductions in strategic years. The strategy works by concentrating two years’ worth of deductible expenses into a single tax year, then taking the standard deduction in the alternate years. For the married couple in our example, this approach yields over $8,880 in tax savings over four years without changing their total charitable giving or other deductible expenses.
Who Benefits Most from This Strategy?
This strategy works best for:
- Taxpayers whose controllable itemized deductions (like charitable gifts) result in total itemized deductions near the standard deduction amount
- Those who give regularly to charity
- Individuals with fluctuating income years (larger itemized deductions are more beneficial in years with higher marginal tax rates
The strategy is less helpful if your itemized deductions are consistently well above or far below the standard deduction threshold.
Common Expenses to Consider for Bunching
Several types of expenses work well with bunching:
Charitable Contributions: The most flexible category for bunching, since you control when you donate. You can concentrate giving in specific years without changing your overall charitable impact.
State and Local Taxes (SALT): There’s currently (as of 2025) a $10,000 cap on SALT deductions, but if this changes these expenses may be available for bunching again.
Conclusion
Itemized deduction bunching can be a powerful tax planning strategy to reduce your tax burden legally. While it requires more planning than simply taking the standard deduction each year, the potential tax savings make it worth considering.
As with any tax strategy, it helps to work with a knowledgeable tax professional who can tailor the approach to your specific situation. At Proseer, we specialize in helping clients navigate tax planning and identify opportunities for tax savings through strategies like itemized deduction bunching.
Ready to see if itemized deduction bunching could benefit your tax situation? Contact Us today to schedule a consultation with one of our tax planning experts.
