What “itemizing” on your taxes means

Last update: February 18, 2026

You do either the Standard Deduction or you Itemize

Most people take the “Standard Deduction”. That’s an amount you can exclude from your income. For example, if your income is $50,000, and you take a Standard Deduction of $20,000, you pay taxes on only $30,000. You don’t pay taxes on the $50,000.

But if you have lots of certain expenses that are more than the $20,000, you can tally them up and exclude that amount from your income instead. For example, you make $50,000, and tally up $24,000 in expenses, so you pay taxes on only $26,000.

The special expenses are called deductions. Claiming them instead of taking the Standard Deduction is called itemizing your deductions.

So, you’ll either take the Standard Deduction, or you’ll itemize your deductions.

Most people take the Standard Deduction because:

It’s easy. You don’t have to spend lots of time hunting down expenses and filling out Schedule A.
Most people don’t have enough itemized deductions to make it worth it to itemize. They get a bigger tax break by using the Standard Deduction.

The reason we say deductions and not expenses is because only certain kinds of expenses are deductible. You can’t deduct all your expenses, only certain special expenses. That’s our next topic.

What kinds of things are deductible if you itemize?

The most common expenses you can itemize/deduct are:

State and local taxes (income tax, sales tax, property tax)
Medical and dental expenses
Home mortgage interest
Gifts to charity

You don’t necessarily get to deduct 100% of each item, there are often limits.

Note that $100 in deductions reduces your income by $100 but it doesn’t reduce your taxes by $100. Let’s say you have $50,000 in income and you’re in a 20% tax bracket, the 20% applies to all your income, and there’s no such thing as a standard deduction. (You rarely have one tax bracket for all your income, I’m simplifing for the example.) $50,000 x 20% = $10,000 in tax.

Now let's say you donate $100 and itemize it. Your income minus deductions is $49,900, and times 20% = $9980. You reduced your taxes by $20, not by $100. In a 20% top bracket, every dollar you itemize saves 20¢ on your taxes.

What this means for recreational gamblers

You can’t deduct any gambling losses if you take the Standard Deduction. The IRS figures that the Standard Deduction covers any losses you might have had. To be able to deduct gambling losses, you have to itemize. No, this isn’t fair, but what are you gonna do?

See my article on gambling taxes for how to report gambling winnings and losses.