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You want to maximize your tax deductions to reduce your tax bill—the question is how. The IRS allows you to choose between itemizing all of your available deductions or using a single standard deduction based on your filing status.
Which choice works best for you? To know for sure, you'll need to look at your deductible expenses side by side with the standard deduction. Whether you itemize or take the standard deduction comes down to which option saves you the most money. Here's a quick look at how both types of deductions work and how to decide which option is best.
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What Is the Standard Deduction?
A deduction is an expense you can subtract from your taxable income to reduce the amount of tax you owe. Standard deductions are a set of predetermined deductions you can use in place of itemizing. If you claim the standard deduction, you don't have to track down individual expenses for the year or wade through receipts: You simply find the correct deduction based on your filing status—single, married or head of household—and subtract that amount from your income.
How much can you claim as a standard deduction? Here's a chart showing standard deductions by filing status for 2024.
| Standard Deductions for the 2024 Tax Year | |
|---|---|
| Filing Status | Standard Deduction |
| Single or married filing separately | $14,600 |
| Head of household | $21,900 |
| Married filing jointly | $29,200 |
Source: IRS
If you and/or your spouse are 65 or older or blind, you may qualify for an additional standard deduction. Check the standard deduction tables in IRS Publication 501: Dependents, Standard Deduction and Filing Information for more information on how much you're eligible to claim.
Pros and Cons of Using the Standard Deduction
The standard deduction is the simplest route to substantial tax savings. As many as 90% of taxpayers claim the standard deduction, most likely because standard deductions are simple, predictable, relatively generous and don't require extensive documentation and math. Here's a quick rundown of the standard deduction's pros and cons.
Pros of the Standard Deduction
- The standard deduction simplifies your tax preparation. It's a flat amount that's easy to claim with no additional forms or calculations.
- You don't need to keep records. You won't slog through receipts at tax time and don't need to worry about record keeping throughout the year.
- It's automatic. You qualify even if you don't have deductible expenses or any recollection of what you spent.
Cons of the Standard Deduction
- It may be less than your total itemized deductions. If you have substantial mortgage interest, property tax, state income tax or other deductible expenses, choosing the standard deduction could mean leaving tax savings on the table.
- It may not be available to you. You can't use the regular standard deduction if your spouse itemizes their deductions or if you're claimed as a dependent on someone else's tax return. Dependents can claim a standard deduction of up to $1,350 or their earned income plus $450, whichever is greater, in 2024.
What Are Itemized Deductions?
Itemized deductions are specific expenses you can deduct from your adjusted gross income to reduce the amount of tax you owe. Common examples of itemized tax deductions include home mortgage interest, charity donations and qualifying medical expenses.
To take an itemized deduction, you may need to provide the IRS with documentation or keep records of your expenses in case of an audit. To deduct medical and dental expenses, for example, you'll need an accurate tally of your out-of-pocket health care expenses for the year, backed up with invoices or receipts.
Common Itemized Deductions
If you decide to itemize, the IRS has a long list of potential deductions to consider. Start by checking this list of common deductions below to see which ones might apply to you.
- Mortgage interest: You can deduct interest paid on the first $750,000 of your mortgage ($1 million if you got your mortgage before December 16, 2017). The mortgage interest deduction is for loans securing a primary residence or second home.
- State and local taxes: Deduct up to $10,000 in state and local taxes ($5,000 if married filing separately), including state and local income tax, property taxes and sales tax.
- Student loan interest: You can deduct the student loan interest you paid during the year, up to $2,500.
- Medical and dental expenses: Out-of-pocket health care expenses in excess of 7.5% of your adjusted gross income may be deductible, but only the portion that exceeds 7.5%.
- Charitable contributions: Your contributions to charity organizations may be tax-deductible if the charity is qualified by the IRS.
- Casualty and theft losses: You may be able to deduct some or all of a loss you've suffered from a federally declared disaster or theft.
Pros and Cons of Itemized Deductions
Itemized deductions are more work to identify, document and claim on your tax return than the standard deduction. They're also variable: Not everybody has deductible expenses and your expenses can change from year to year. On the other hand, it's possible to deduct hundreds or thousands of additional dollars from your income if your itemized deductions are high. Here are the essential pros and cons.
Pros of Itemized Deductions
- You may get more back. Your itemized deductions may be greater than the standard deduction, especially if you have a large mortgage and pay property taxes.
- Itemizing may save you even more money if you're in a higher tax bracket. For example, single filers who earn $191,951 or more in 2024 may save 32 cents in taxes for every additional dollar they deduct.
Cons of Itemized Deductions
- It may not be worth it. You may not have enough itemized deductions to beat the standard deduction.
- Tax prep is more complicated. You'll need to comply with the qualifications, limits and required forms and documentation for each itemized deduction you claim.
- You'll need good recordkeeping. You may need to keep receipts and transaction records for deductible expenses throughout the year.
Should You Itemize or Take the Standard Deduction?
Choose standard or itemized deductions based on which option gives you the best tax savings. How can you tell which option is better? Here are three ways to estimate your savings.
1. Do a Gut Check
For many, choosing the standard deduction is simple. If you don't have a mortgage or property taxes and don't have large medical bills or losses from a natural disaster (or other major deductible expense), you probably don't have enough itemized deductions to outweigh the standard deduction. Find the standard deduction amount for your filing status, then think about what potential deductions you might itemize. If you don't think you have many deductible expenses, choose the standard deduction and move on.
2. Do a Quick Estimate
Not sure whether your itemized expenses will exceed the standard deduction? Find or estimate your potential deductions. Check Form 1098 or your year-end statement to find the mortgage interest you paid. Add in your approximate property taxes and state and local income taxes, plus any additional deductions you can think of off the top of your head. Are you in the ballpark for beating the standard deduction? Are you ahead by itemizing? If so, it may be worth moving on to the next step.
3. Do the Full Calculation
Gather up the information you need to claim itemized deductions on your tax return: tax forms, transaction records, receipts and invoices, and so on. Once you've added up your deductions and have a precise total, compare your total to the standard deduction for your filing status. Choose the option that gives you the biggest deduction.
Where to Find Help
Still confused? Tax preparation software may help you sort through your potential deductions, so you can determine whether standard or itemized deductions will work best for you. Better still, a tax pro can help you map out your options―and may provide additional insight on how to optimize your tax return.