Standard vs. itemized deduction: how to know which one to choose and what the IRS recommends

When filing tax returns in the United States, taxpayers can access different deductions that allow them to reduce their income subject to federal taxes.

The Internal Revenue Service (IRS) distinguishes between the standard deduction and itemized deductions. Although both have the same goal, they work differently, and choosing the most convenient one depends on each taxpayer’s situation.

How is a standard deduction different from an itemized deduction?

The standard deduction is a fixed amount that depends on the taxpayer’s filing status. The IRS adjusts it annually for inflation and includes additional amounts for people age 65 or older and blind people.

By contrast, itemized deductions allow certain expenses incurred during the tax year to be deducted, as long as they meet the requirements established by the regulations. Instead of applying a fixed amount, the expenses that can legally be deducted are added up.

In general, taxpayers must choose one of these two methods, since they cannot use them simultaneously on the same return.

How do you know which one is better, according to the IRS?

To know which one is better, the IRS recommends comparing the amount of the standard deduction that applies to the taxpayer with the total expenses that can be included among itemized deductions.

In general, it is better to choose the option that allows you to reduce the greatest amount of taxable income.

For example, for tax year 2026, if a person is entitled to a standard deduction of US$16,100 but has US$18,000 in allowed deductible expenses, they could benefit from choosing itemized deductions.

However, there are people who cannot claim the standard deduction. These include married taxpayers who file separately when their spouse uses itemized deductions.

How are deductions itemized?

Taxpayers who choose this method must complete Schedule A of Form 1040, where the expenses that can be deducted from taxable income are identified and calculated.

Among the items recognized by the IRS are:

• Medical and dental expenses: certain health care expenses that were not reimbursed.
• State and local taxes: payments of income or sales taxes, real estate taxes, and certain personal property taxes.
• Mortgage interest: interest on qualifying mortgage loans.
• Charitable donations: contributions made to authorized organizations.
• Casualty losses: certain losses that meet legal requirements.
• Gambling losses: amounts that can be deducted within the established limits.

To complete the schedule, you must identify the expenses that meet the requirements, calculate how much can be deducted for each item, and add up the allowed amounts.

In addition, the IRS recommends keeping receipts and documents that can support the deductions claimed.

The limitations of itemized deductions: what are they?

Not all expenses can be deducted in full, since the IRS sets specific limits for each category.

In the case of medical and dental expenses, only the portion of eligible unreimbursed expenses that exceeds 7.5% of the taxpayer’s adjusted gross income can be deducted.

State and local taxes have a maximum amount that can be deducted each year. Meanwhile, the limits on mortgage interest depend on how much money was borrowed, when the loan was taken out, and what it was used for.

As for charitable donations, the allowed amount depends on the type of contribution, the beneficiary organization, and the applicable limits. Casualty losses must also meet specific requirements and, in general, be related to federally declared disasters.

Finally, for tax year 2026, gambling losses can be deducted up to 90% of their value, without exceeding the winnings obtained from those activities.