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Should you itemize your deductions or take the standard deduction? Both lower how much you pay in taxes, but your lifestyle and expenses determine which option is most beneficial. Compare your potential itemized deductions to the standard deduction and take whichever one nets you the lowest taxable income—and therefore the lowest possible tax bill. Here’s what you need to know about the standard deduction and itemized deductions.
TurboTax®
TurboTax®
Standard deduction
The standard deduction is a specific dollar amount subtracted from your adjusted gross income (AGI) to arrive at your taxable income—which lowers your tax bill. The amount is based on your tax filing status, for example, whether you are married or single. The IRS releases the updated standard deduction amounts prior to the start of the tax year.
For tax year 2023 (tax returns due April 2024), the standard deduction is:
- $13,850 for single taxpayers and those married filing separately.
- $20,800 for heads of household.
- $27,700 for those married filing jointly and qualifying surviving spouses.
For tax year 2024 (tax returns due April 2025), the standard deduction is:
- $14,600 for single taxpayers and those married filing separately.
- $21,900 for heads of household.
- $29,200 for those married filing jointly and qualifying surviving spouses.
Claiming the standard deduction is easy. You simply select the dollar amount based on your tax filing status and enter it directly on Line 12 of your Form 1040, U.S. Individual Income Tax Return. However, if you can be claimed as a dependent by another taxpayer, your standard deduction is less. You can deduct the greater of:
- $1,250, or
- Your earned income plus $400 (but not more than the standard deduction for your filing status).
The Tax Cuts and Jobs Act (TCJA) of 2017 had a major impact on tax filing for U.S. taxpayers. One of the biggest changes was the near doubling of the standard deduction. As a result, more taxpayers than ever are taking the standard deduction rather than itemized deductions. As of the most recent data published by the Internal Revenue Service (IRS), approximately 87% of taxpayers took the standard deduction. Many tax law changes from the TCJA, including the standard deduction changes, are in effect though the end of 2025.
Itemized deductions
Itemized deductions are specific expenses that you have incurred in allowable categories that can be used to reduce your tax bill. Like the standard deduction, the total of your itemized deductions are subtracted from your AGI to arrive at your taxable income. If the total of your allowable expenses is greater than the standard deduction you qualify for, you should itemize your deductions.
The biggest downside: This is more complicated and time consuming. You also need to document your expenses when you itemize, in case you are ever audited by the IRS.
To claim your itemized deductions, you need to complete Schedule A, Itemized Deductions, of the Form 1040. That total is written on Line 12 of the Form 1040—the same line where the standard deduction would be entered if you opted for it instead.
These are the major categories of itemized deductions:
- Medical and dental expenses that exceed 7.5% of your AGI.
- State and local taxes.
- Home mortgage interest and points.
- Charitable contributions.
- Casualty, disaster, and theft losses from a federally declared disaster zone.
When to claim standard deductions?
You should claim the standard deduction if the amount is greater than your potential itemized deductions. With the current tax laws in effect, most taxpayers are better off with the standard deduction. It is easier and requires no calculation or documentation. You simply need to know your filing status.
When should you itemize?
You should itemize if the total of your allowed deductions are greater than the standard deduction for your filing status. For example, if you own a home, your property taxes and mortgage interest may exceed the standard deduction. If you contribute a significant amount to charity or have large medical expenses in a certain year, it may also benefit you to itemize your deductions.
TIME Stamp: Do the math before deciding between the standard deduction or itemizing
Which deduction option is best for you is highly dependent on your personal expenses and tax situation. You should compare both options to determine which one allows you the greater deduction—and the lowest tax bill. If the total of your potential itemized deductions is lower than the standard deduction for your tax-filing status, you are better off taking the standard deduction. If the total is higher, you are better off itemizing.
A tax software program, such as TurboTax, can do this comparison for you. It asks a series of questions to identify which itemized deductions you qualify for. From there, you just need to enter the dollar amount you have paid for each expense type. If you want even more assistance, there are other options:
- TurboTax Live Assisted is a do-it-yourself tax filing software that gives you access to expert help.
- TurboTax Live Full Service matches you with a local tax expert who files your taxes for you.
TurboTax®
TurboTax®
Frequently asked questions (FAQs)
What are the 4 standard paycheck deductions?
Here are four types of deductions that you may see on your paycheck:
- Pre-tax deductions: Removed from your gross pay before taxes are withheld.
- Statutory deductions: The amounts legally required to be withheld such as FICA, state, and federal income taxes.
- Post-tax deductions: Removed from your net pay after all legally required taxes have been paid.
- Voluntary deductions: The amounts the employee opts to pay for employer-sponsored benefits, such as a 401(k). These may be pre- or post-tax.
What if my standard deduction is more than my income?
Generally, if your earned income is less than the standard deduction, you will not have to file a tax return. But always double check—there are certain situations where you may still be required to file a tax return.
Is there a limit on itemized deductions?
There is currently no limit on the total of your itemized deductions—but there are limits on how much you can deduct from certain categories. For example, state and local taxes have a limit of $10,000 (or $5,000 if married filing jointly).
What is the 2% rule for itemized deductions?
Before 2017, the 2% floor rule limited itemizing miscellaneous expenses. Taxpayers could only claim miscellaneous expenses that exceeded 2% of their AGI. With the tax changes from the TCJA, these deductions have been suspended, along with the 2% rule that limited them. This means the 2% rule does not apply at least through 2025. Miscellaneous expenses included:
- Unreimbursed job expenses.
- Tax preparation and accounting expenses.
- Safe deposit box fees.
- Investment fees.
- Some legal fees.
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