Itemized Deductions: What They Are, How They Work

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When you file your federal income tax return, you have a choice to make: claim the standard deduction or itemize your deductions. The standard deduction is a dollar amount set by the IRS, while itemizing your deductions means you add up your total costs for a list of expenses, such as charitable contributions and property taxes.

Both types of deductions — standard and itemized — reduce how much of your income is subject to tax, so both reduce your tax liability. You claim either the standard deduction amount or the total amount of your itemized deductions, and you subtract that from your adjusted gross income, or AGI, thus reducing your taxable income.

For most taxpayers, it makes more sense to claim the standard deduction, because it’s usually a larger dollar amount than a taxpayer’s total expenses that qualify as itemized deductions. Still, for some taxpayers, itemizing deductions is a better choice. It all depends on your situation.

What are itemized deductions?

An itemized deduction is an expense you can claim on your tax return — for example, medical expenses, charitable contributions and property taxes — to reduce your adjusted gross income, or AGI. Reducing your AGI means that a smaller amount of your income is subject to tax.

To qualify as an itemized deduction, the expense has to be an IRS-approved expense. For many itemized expenses, the rules can be somewhat complex. You might need to meet specific thresholds before you can claim that expense, or there might be a cap on the dollar amount that you can claim.

For example, you can claim medical expenses, but only those that exceed 7.5 percent of your adjusted gross income. And there’s currently a $10,000 cap on claiming state and local taxes.

Standard deduction vs. itemized deductions

As a result of the 2017 Tax Cuts and Jobs Act, which almost doubled the standard deduction amounts, most taxpayers now take the standard deduction. That’s because the smartest tax move is to take the largest deduction available to you, whether that’s the standard deduction or your total itemized deductions. The largest deduction will give you the biggest reduction in taxes.

If the total of your itemized deductions exceeds the standard deduction, then it’s better to use itemized deductions to lower your taxable income. That could be the case if you had large medical expenses, suffered a severe loss of personal property due to a declared natural disaster, made substantial charitable contributions and/or paid mortgage interest and property taxes.

Unless you paid large amounts out of pocket for qualified expenses, your itemized deductions might not reduce your taxable income as much as the standard deduction.

For example, if you’re a single filer, you can claim a current standard deduction of $14,600 on your 2024 tax return. For it to make sense to itemize, your qualified deductible expenses would have to add up to more than $14,600.

Standard deduction amount for 2024 tax year (returns filed in 2025)

Examples of itemized deductions

Here are some of the most common expenses that qualify as itemized deductions:

For a complete list, see this IRS page on credits and deductions.

Itemized vs. above-the-line deductions

There are a handful of above-the-line deductions that taxpayers can claim whether they itemize or take the standard deduction. These deductions are called “above the line” because they are subtracted from your income on Form 1040 before adjusted gross income (AGI) is calculated. (Itemized deductions or the standard deduction are subtracted from AGI.)

This means that whether you itemize or claim the standard deduction, you can claim these tax deductions if you qualify:

For a complete list, see this IRS page on credits and deductions.

How to claim itemized deductions

To claim itemized deductions, file Schedule A along with your Form 1040. You can use the instructions for filling out Schedule A as a guide in helping you understand which expenses qualify. (See Schedule 1’s “adjustments to income” section for a list of above-the-line deductions.)

Be sure to keep documentation on hand to support your claims. For example, for charitable contributions over $250, be sure to ask the charitable organization for a written acknowledgment of your donation.

Pros and cons of itemized deductions

The major advantage of itemizing your deductions is that, if the total dollar amount exceeds the amount of the standard deduction, then itemizing means you’ll pay a lower tax bill.

But a major headache of claiming itemized deductions is that it can be complicated, because there are specific limitations to many of the expenses. It can be a much more time-consuming process than claiming the standard deduction. If you’ve never filed itemized deductions before, consider enlisting the help of a tax specialist or use tax software that will guide you through the process.

Also, keep in mind that you need to gather and hold onto proof that you paid the expenses you’re deducting. The standard deduction doesn’t require any additional paperwork.

Some taxpayers must itemize their deductions

In some situations people aren’t allowed to claim the standard deduction:

• If a couple files as “married filing separately” and one spouse itemizes, then both spouses must itemize deductions.
• You file your tax return for a period covering less than 12 months.
• You were a nonresident alien or dual-status alien. (There are some exceptions to this rule.)
• The return is filed for a trust, estate, or partnership.

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