Standard Deduction vs. Itemized Deduction: How To Decide

There are two main ways to use tax deductions to lower your tax bill: either claim the standard deduction, or itemize your deductions, which means add up a list of your qualified expenses. Then you deduct that amount — either the standard deduction or your total itemized deductions — from your adjusted gross income to reduce your tax bill.

While the vast majority of taxpayers now take the standard deduction, for some taxpayers it may make more sense to itemize deductions.

How to decide: standard vs. itemized deduction

• Standard deduction: The standard deduction is a set dollar amount, determined by the IRS. The dollar amount is different for each filing status (single filers, married filing jointly, etc.), and is higher for visually impaired taxpayers and those who are age 65 or older. The IRS usually increases the amounts each year to account for inflation. Almost all taxpayers are eligible to claim the standard deduction.

• Itemized deductions: Itemizing your deductions lets you deduct certain eligible expenditures, such as medical expenses, mortgage interest, property taxes, and charitable contributions. You must fill out Schedule A to itemize your deductions, and you should keep your receipts and records in case you get audited.

You can’t take both — you must choose between the two. And because the standard deduction was nearly doubled and some itemized deductions were limited as part of the Tax Cuts and Jobs Act of 2017, it’s much harder these days for most taxpayers to compile a list of qualified itemized deductions that adds up to more than the standard deduction.

In fact, more than 90 percent of taxpayers took the standard deduction in 2022, according to the most recent IRS data.

Above-the-line deductions

Keep in mind that there are also a handful of “above the line” deductions that you can claim whether you itemize or claim the standard deduction. These above-the-line deductions include:

How itemized deductions work

To itemize your deductions, you must enter your qualified expenses onto Schedule A, and then the total of your itemized deductions from Schedule A is entered on line 12 of Form 1040.

If you choose to itemize, there are a couple of things to keep in mind:

• Many deductions have limitations, such that not every dollar of your expenses can be subtracted from your income. The instructions for Schedule A, which is the form you use to claim itemized deductions, offers insight into these rules. For example, medical and dental expenses must exceed 7.5 percent of your adjusted gross income before they can be deducted. If you didn’t spend that much, then none of your medical costs are deductible. Similarly, there are restrictions on the amount of your charitable contributions that you can deduct in a given year.

• Be aware that tax laws — particularly those related to tax deductions — are likely to change after 2025, because the Tax Cuts and Jobs Act is set to expire at the end of the year. It’s unclear at this point whether lawmakers will let the law expire, or will renew some or all of its provisions. As just one example, the state and local tax (SALT) deduction, which includes the deduction for property taxes, is currently capped at $10,000 — but that cap is currently slated to expire at the end of 2025.

Pros of itemized deductions

Cons of itemized deductions

• Itemizing deductions requires more paperwork, filling out Form 1040’s Schedule A, and keeping records of expenditures in case you get audited.

• While there are plenty of opportunities to itemize, each category has its own rules and limitations on how much can be deducted.

How the standard deduction works

The standard deduction is a flat dollar amount determined by the IRS. Claiming the standard deduction entails simply entering that dollar amount on line 12 of Form 1040. In other words, it requires a lot less paperwork and record keeping than itemizing does. And for many taxpayers, the standard deduction is higher than your itemized deduction would be — which means you’ll save more on your taxes.

Your standard deduction amount depends on your filing status.

Standard deduction amounts for 2024 and 2025

Taxpayers who are over the age of 65 or visually impaired qualify for extra standard deduction amounts by checking a couple of extra boxes on their tax return.

Remember, be sure to use the deduction method that gives you the biggest tax benefit. That is, it makes the most financial sense to claim the bigger number — your standard deduction or your total itemized deductions — because that number will reduce your income the most, thus trimming your tax bill as much as possible.

So, if your deductible expenses add up to less than your standard deduction, you can throw away all those receipts you stashed in the hope of turning them into tax breaks.

Pros of using the standard deduction

• The vast majority of taxpayers are eligible to claim the standard deduction.

• You’ll save a lot of time by not having to fill out Schedule A for itemized deductions.

• If you use a professional tax preparer, you could save an average of more than $100 on fees by using the standard deduction. Similarly, some tax software providers offer lower-cost products for people who claim the standard deduction rather than itemizing.

Cons of using the standard deduction

• You may leave money on the table by using the standard deduction rather than itemizing. It may be worth analyzing your expenses each year to make sure you pick the right option.

• There may be some situations where you can’t claim the standard deduction, such as if you’re married filing separately and your spouse itemizes their deductions.

Learn more: