Standard Deduction vs. Itemized Deductions: What's the Difference?

January 24, 2024

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What we’ll cover:

Tax deductions can help by lowering your taxable income, thereby decreasing your tax liability.
For 2024, the standard deduction for single filers is $14,600. For 2023, it's $13,850.
Itemizing deductions might be a good option if you paid a lot in state and local income taxes, property taxes, made significant charitable contributions, and a few other situations.

You may already be familiar with standard versus itemized deductions, but as you prepare to file tax returns, it’s not a bad idea to review some tax basics.

What is a tax deduction?

Whether you file your taxes yourself every year or have an accountant do it, you’re probably familiar with the idea that your taxable income impacts how much tax you owe (you can learn more about tax brackets here).

Keep in mind that not every dollar and cent you made throughout the year is necessarily taxable income (the income amount you have to pay taxes on). Generally speaking, certain expenses you incurred during the year may be “deductible” or subtracted from your taxable income, which could help lower the amount of taxes you pay.

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Here’s a basic example. Say your gross income for the year is $80,000 and you receive a tax deduction of $15,000. This could help lower your taxable income to $65,000 ($80,000 - $15,000).

When preparing your tax return, you'll have to decide whether to take the standard deduction or itemize your deductions.

Standard deduction

The standard deduction is the standard dollar amount you’re allowed to take on your tax return to reduce your overall taxable income. The amount of the deduction is usually adjusted each year for inflation and varies based on your filing status and age. You may be able to claim a higher standard deduction amount if you’re older and/or blind. See IRS’s Standard Deduction for more information.

For example, for 2023, the standard deduction is $13,850 for single filers or married filing separately, $20,800 for heads of household and $27,700 for those married filing jointly.

For 2024, the standard deduction is $14,600 for single filers or married filing separately, $21,900 for heads of households, and $29,200 for those married filing jointly.

You don’t have to file any extra forms to claim the standard deduction or declare any specific expenses. It’s usually an option you can select on your Form 1040. Keep in mind that you cannot take the standard deduction if you choose to itemize your deductions.

According to IRS rules, the following taxpayers cannot claim the standard deduction:

a married individual filing as “married filing separately” whose spouse itemizes their deduction
an individual who files a return for less than a 12-month period due to a change in his or her annual accounting period
an individual who was a nonresident alien or dual-status alien during the tax year (certain exceptions apply)
an estate or trust, common trust fund, or partnership

Potential benefits of the standard deduction

As we mentioned, taking the standard deduction does not require any additional forms, potentially saving you time during tax season. Many tax filers can claim it, regardless of income. Certain taxpayers could also qualify for an even bigger deduction under the standard deduction.

For the 2023 tax year, taxpayers who are 65 years and older, or those who are blind, are eligible for an additional deduction of $1,850 (single or head of household filers) or $1,500 (married filing jointly or qualified surviving spouse).

Bottom line: Using the standard deduction can be convenient and timesaving. You know exactly how much you can expect to deduct and don’t have to sort through and organize various expenses.

When the standard deduction might not be a good option

The standard deduction might not be your best option if itemizing your deductions would result in a larger deduction.

We’ll get into itemized deductions in the next section, but in terms of deciding which to use, in some cases, it really can be as simple as going with the deduction that provides the greatest subtraction to your taxable income.

Itemized deduction

While the standard deduction allows taxpayers to subtract a set amount from their taxable income, itemized deductions allow taxpayers to lower their taxable income through a list of qualifying expenses approved by the IRS.

In other words, itemizing your deductions will likely take more time than simply checking the “standard deduction” box on your tax forms.

To itemize your deductions, you can use Schedule A, Form 1040. Qualifying expenses can include:

state and local income and sales taxes, personal property taxes, and real estate taxes
mortgage interest
gifts to charity
medical and dental expenses

To be sure, that can be a lot to keep track of. Sure, you might be able to pull some of that information straight from bank statements. But combing through them and then organizing the expenses can take some time, as you want to be sure all of the amounts are accurate and you’re not forgetting anything.

Yet the work may be worth it if the total of your itemized deductions ends up being more than the standard deduction. (Remember, this could help further lower your taxable income.)

Potential benefits of itemizing your deductions

You might be surprised that in general, itemizing deductions is less common for taxpayers.

For individuals who are eligible for the standard deduction, you may still choose to itemize your deductions instead if the amount of your qualifying expenses is more than the standard deduction.

When itemizing deductions might not be a good option

You may have figured this out already: If the total of your allowable deductible expenses for the tax year isn't greater than the standard deduction you’re eligible for, itemizing is likely not your best bet.

Because itemizing requires quite a bit of work compared to just taking the standard deduction, you'll want to have a pretty good idea of how much you stand to save by itemizing over taking the standard deduction. If your tax situation is complex, you may want to work with a tax professional to see what makes sense for you.

The bottom line

Trying to decide between the standard deduction or itemizing means having to review your expenses for the year and doing some math to figure out which option could give you the bigger deduction.

Remember, everyone’s tax situation is different, so it’s a good idea to chat with a tax professional who can help you crunch the numbers and decide which deduction works for you.

This article is for informational purposes only and is not a substitute for individualized professional tax advice. Individuals should consult their own tax advisor for matters specific to their own taxes. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Goldman Sachs Bank USA and Goldman Sachs & Co. LLC are not providing any financial, economic, legal, accounting, tax or other recommendations in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates. Neither Goldman Sachs Bank USA, Goldman Sachs & Co. LLC nor any of their affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements of any information contained in this document and any liability therefore is expressly disclaimed.