When it comes to your tax filing, understanding deductions is vital to maximizing your potential refund or minimizing the income tax you owe the Internal Revenue Service (IRS).
A deduction is an amount you can subtract from your taxable income to reduce the overall amount subject to taxation. (This is different than a .)
When filing your income taxes each year, there are two options to consider claiming:
- the standard deduction or itemized deductions
The difference between the standard deduction vs. itemized deductions comes down to simple math. The standard deduction lowers your income by one fixed amount. On the other hand, itemized deductions are made up of a list of eligible expenses. You can claim whichever deduction reduces your tax bill the most. You are not allowed to claim both.
Standard deduction: What is it and how does it work?
While we covered the basics above, let’s dig deeper into the standard deduction definition and cover “What is the standard deduction exactly? How does the standard deduction work?”
The standard deduction is a fixed dollar amount that reduces the income you’re taxed on and is the most common type of deduction taxpayers take. The standard deduction:
- Allows you to take a tax deduction even if you have no expenses that qualify for claiming itemized deductions
- Eliminates the need for itemizing deductions
The standard deduction amount varies every year according to your filing status.
These are the 2025 standard deduction amounts (for returns filed in 2026):
- Single or Married Filing Separately — $15,750
- Married Filing Jointly or Qualifying Surviving Spouse — $31,500
- Head of Household — $23,625
These are the 2024 standard deduction amounts (for returns filed in 2025):
- Single or Married Filing Separately — $14,600
- Married Filing Jointly or Qualifying Surviving Spouse — $29,200
- Head of Household — $21,900
What are itemized deductions and how do they work?
Itemized deductions also reduce your Adjusted Gross Income (AGI), but work differently than the standard deduction. As the name implies, the standard deduction is a standard (or fixed) amount. In contrast, the itemized deduction is a deduction for eligible expenses that you can itemize. And the amount differs from taxpayer to taxpayer. The itemized deduction amount is determined by adding all applicable deductions and subtracting the sum from your adjusted gross income. Common and allowable itemized deduction items include:
- Casualty and theft losses from a federally declared disaster
- Below-the-line Charitable donations
- Deduction for state and local taxes (Related read: What is the SALT deduction?)
- Gambling loss deduction (only to the extent of gambling winnings reported on your tax return)
- Home mortgage interest (Related read: Mortgage interest tax deduction)
- Investment Interest paid on money borrowed for property held for investment
- Unreimbursed dental and medical expenses (AGI threshold is 7.5%), including health insurance premiums paid with after-tax income
Other slightly less common but are equally tax-beneficial itemized deductions to consider this tax season include:
- Federal estate tax on income in respect of a decedent
- Amortizable bond premium on bonds acquired before Oct. 23, 1986
- Deduction for repayment of amounts under a claim of right if over $3,000
- Certain unrecovered investments in a pension
- Impairment-related work expenses of a disabled person
Which deductions require itemizing?
Certain deductions can only be claimed if you itemize, including expenses like mortgage interest, state and local taxes, charitable contributions, and certain medical expenses. This means you can only claim them if you’ve chosen to itemize vs. claim the standard deduction.
Here are some common deductions that require itemizing:
- Mortgage interest paid on a qualified primary or secondary home
- State and local taxes (SALT), such as state and local income taxes (or sales taxes) and property taxes (subject to IRS limits)
- Charitable contributions made to qualified organizations
- Medical and dental expenses that exceed a percentage of your adjusted gross income
- Casualty or theft losses related to a federally declared disaster
- Investment interest expense on money borrowed to invest
Keep in mind, you benefit from itemizing if your total itemized deductions are higher than the standard deduction. Also, the criteria vary for each deduction.
Itemized deductions vs standard deduction: How do you decide what route to take?
Are itemized deductions vs. a standard deduction the best for your tax outcome?
It’s clear that deductions reduce your tax liability. Therefore, you will want to determine which type of deduction benefits you most.
If you’re still questioning, “Should I itemize deductions?”: Here’s the answer. It comes down to the amount that is the most. Crunch a few numbers to arrive at the potential answer.
- First, calculate your itemized deductions. You might be able to claim some itemized deductions on your state return even if you can’t claim them on your federal return.
- Then, compare the itemized deduction amount to the standard deduction (based on your filing status).
- If the amount of your itemized deduction exceeds the standard deduction, then you should itemize deductions on your tax return.