macOS and system data taking up 74% of my drive, preventing updates

This can happen due to a combination of macOS itself, caches, application support files, logs, local snapshots, and other data that macOS groups under System Data. The Storage settings don't always clearly explain what's occupying the space.

Here are a few things you can try to free up storage safely:

1. Check your user Library folder and caches

• Open Finder and press Command + Shift + G.
• Type ~/Library/Caches and press Enter.
• Review the folders individually and look for unnecessarily large caches, such as those belonging to browsers or Adobe applications.
• Delete only the cache files you understand and no longer need. Some applications may recreate these files or take longer to launch the next time.
• Empty the Trash to reclaim the space.

2. Check hidden Library folders

• Open Macintosh HD in Finder, then navigate to Users → your username.
• Press Command + Shift + . (period) to show hidden files and folders, if applicable.
• Look for the Library folder. It may appear greyed out when hidden items are displayed.
• You can also inspect the Library folder inside the Shared directory, if present.

Review folders such as Application Support, Logs, Caches, and old application data carefully. Check the size and contents of each folder before deciding whether anything should be removed. Application Support, in particular, can contain important data, settings, plugins, and project files, so don't delete entire folders indiscriminately.

3. Check for other storage consumers

• Remove old iPhone or iPad backups you no longer need.
• Check your Downloads folder and uninstall applications you no longer use.
• If you use Time Machine, investigate whether local snapshots are occupying significant space.
• Restart your Mac and recheck Storage, as its categories can take time to update.

Important: Don't randomly delete files from /System, /private, or other unfamiliar system directories. Always inspect what a folder contains and confirm that its contents are unnecessary before deleting anything. If in doubt, leave it alone.

Finally, macOS updates may require more temporary free space than their advertised download size. If you still cannot update after cleaning up, check exactly how much free space the installer requires and investigate what is contributing to the reported 57.19 GB of macOS and 27.99 GB of System Data.

The goal isn't to make System Data as small as possible; it's to identify unnecessary data safely and recover enough space for the update.

Any Mac with just a 120GB internal SSD means the user is on the losing end of the storage battle.....even a 250GB internal SSD is borderline depending on the user's workflow.

Ignore any any advise to delete cache files. That is just a complete waste of time as the cache will just be rebuilt as soon as the app associated with it is used again. Plus removing cache files just slows down the system....your system is probably already slow for not having enough Free storage space.

These days people need to always keep at least 80GB-100GB of Free storage space at all times since even this space can sometimes disappear very quickly even with seemingly simple workloads. Also, ignore the very misleading "Available" storage space shown every where in macOS since it is not synonymous with Free. In fact the only place where the Free space value is shown correctly is in Disk Utility. Ignore all other storage related values since they are cryptic, meaningless, and even outright misleading.

At best you will have to find the largest files/folders and move them to external media, or delete them, but even doing this.....it can take a couple of days before the Free space value shows any change as that "deleted" data will still reside in any hidden APFS backup snapshots associated with Time Machine backups (some third party backup software will also utilize hidden APFS snapshots). A couple of days after the backups have been fully transferred to external media, then those hidden APFS snapshots containing the "deleted" data should be deleted themselves (third party backup software may do this on a different time).

View APFS snapshots in Disk Utility on Mac - Apple Support

If your largest amounts of data are stored in macOS libraries such as Music, Photos, videos, etc., then Apple does provide instructions & support for relocating those libraries to external media.

Since you have an M1 system, it is probably time to upgrade to a newer Mac which now has a minimum internal SSD of 500GB (avoid the NEO with 250GB SSD as that is likely too small for you as well). Remember, even a 500GB SSD will only hold 350GB of user data at best after taking into account macOS 27 itself, the unavoidable Apple Intelligence consuming 35GB+ of storage, and the necessary 100GB of Free storage space you need to maintain.

FYI, a 120GB internal SSD is too small to hold more than a few GBs of user data. Trying to keep enough Free space is just going to be a constant battle. Time to move on and get a better sized system to better meet your needs.

"macOS and system data taking up 74% of my drive, preventing updates: Why do macOS and System Data use 74% of my drive? Can't update I have an M1 MacBook with 115 GB of storage and 98.85 GB is used. macOS is 57.19 GB and System Data is 27.99 GB, while my own files are only about 11 GB. I can't install updates. Why is this happening, and what am I doing wrong? How can I fix it?"

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Clearing System Data:

You can clear System Data(formality called "Other" in older macOS versions) in-full on a Mac, using my User Tip: How to Use Finder to Clear “System Data" on a Mac - User Tip

macOS is using more and more disk space especially with the advent of Apple Intelligence. With macOS Golden Gate 55 GB to 60 GB seems about right.

Another thing to note is that System Data is also a catch all for anything that doesn't neatly pigeon hole into any of the other categories.