What Are Itemized Deductions?
Itemized deductions are specific expenses that taxpayers can subtract from their gross income to reduce the income subject to federal income tax. Instead of taking the standard deduction, itemizing allows you to list certain qualifying expenses individually, such as medical costs, mortgage interest, and charitable donations. The goal is to lower your taxable income, which in turn reduces the amount of tax you owe.
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How Itemized Deductions Work
When you file your federal income tax return, you can elect to take the standard deduction or itemize your deductions. Itemizing involves filling out Schedule A of Form 1040, where you report and total all eligible deductible expenses.[1] These expenses are then subtracted from your gross income to determine your taxable income.
Here’s an example: Let’s say your gross income for the year is $70,000, and you identify $5,000 in qualifying expenses. This makes your adjusted gross income (AGI) $65,000. You then have $20,000 in itemized deductions you can deduct from your AGI, making your taxable income $45,000. The lower your taxable income, the less tax you are required to pay.
The Internal Revenue Service (IRS) has specific rules and limits for what can be deducted, and you must have sufficient and proper documentation to support each claim. Itemizing can take more time than the standard deduction, but it can result in greater tax savings.
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Itemized Deductions vs. Standard Deductions
The standard deduction is a fixed dollar amount that reduces the income you are taxed on. The amount depends on your tax filing status—single, married, filing jointly, head of household, etc.—and is adjusted yearly for inflation. Here are the standard deductions for 2025:
2025 Standard Deduction
| Tax Filing Status | Deduction Amount |
|---|---|
| Single | $15,000 |
| Married Filing Separately | $15,000 |
| Head of Household | $22,500 |
| Married Filing Jointly | $30,000 |
| Qualifying Serving Spouse | $30,000 |
Source: Internal Revenue Service [2]
Choosing between the standard deduction and itemized deductions depends on which option gives you the lowest taxable income. If the total of your itemized deductions exceeds the standard deduction for your filing status, then itemizing would be the better choice.
Standard Deduction Pros:
- Simple and easy to claim
- There is no need to keep records of individual expenses
- Automatically available to most taxpayers
Itemized Deduction Pros:
- Simple and easy to claim
- There is no need to keep records of individual expenses
- Automatically available to most taxpayers
Ultimately, you should calculate both options and consult a tax professional to see which one benefits you the most.
What Expenses Can You Itemize?
The IRS allows several types of expenses to be itemized. Some of the most common itemized deductions are:
- Medical and Dental Expenses: You can deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI).
- State and Local Taxes: This includes state income or sales tax and property taxes up to a combined limit of $10,000. (Plug and play with our Property Tax Calculator).
- Mortgage Interest: Interest paid on mortgages for your primary residence and, in some cases, a second home, is deductible up to certain limits.
- Charitable Contributions: You can deduct donations to qualified charities, both cash and non-cash, up to 60% of your AGI.
- Casualty and Theft Losses: Losses from federally declared disasters may be deductible.
>> How much do you earn? Plug and Play with our Gross Income Calculator
Who Should Itemize Deductions?
High-income earners, homeowners, and those with complex financial situations are more likely to benefit from itemizing. However, anyone with substantial deductible expenses should compare both deduction options. You should consider itemizing if:
- You own a home and pay significant mortgage interest and property taxes.
- You had large medical or dental expenses that exceeded 7.5% of your AGI.
- You made substantial charitable donations.
- You paid high state or local taxes.
- You experienced significant casualty losses due to a federally declared disaster.
Where You Claim Itemized Deductions
Itemized deductions are claimed on Schedule A of IRS Form 1040. This schedule is divided into different sections for each type of deduction. You will need to list each deduction, provide totals, and attach any required documentation to support your claims.
After completing Schedule A, the total amount of your itemized deductions is transferred to your main tax form, Form 1040, which is subtracted from your AGI to determine your taxable income.
Many online tax software programs can guide you through the itemizing process, or you can work with a tax preparer to ensure accuracy. Remember to keep receipts, statements, and other records for at least three years in case the IRS requests verification.[3]
Smart Summary
Itemized deductions are specific expenses you can subtract from your income to reduce the amount of tax you owe. They help you determine if you are eligible for a tax refund or have a tax liability. Unlike the standard deduction, itemizing allows you to list individual expenses such as mortgage interest, state and local taxes, medical costs, and charitable contributions. If your total itemized deductions are higher than the standard deduction, itemizing can save you more money on your taxes.
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(1) Internal Revenue Service. Instructions for Schedule A. Last Accessed April 25, 2025.
(2) Internal Revenue Service. Publication 505 (2025), Tax Withholding and Estimated Tax. Last Accessed April 25, 2025.
(3) Internal Revenue Service. How long should I keep records? Last Accessed April 25, 2025.
