What is the difference between its and it's?

It's is always the abbreviation of "it is" as in "It's (= it is) a nice day, isn't it?" 

Its is the possessive of "it" as in, "That is Morton's puppy but I don't know its name." 

In the second sentence, its means "belonging to it".

See this explanation from ProWriting Aid:

It's vs its is one of the most common English grammar mistakes made.

Its (no apostrophe) is the possessive form of the pronoun it. Most possessives use an 's, which is probably the reason that many people find this confusing.

It's (with apostrophe) is the shortened form of it is. This contraction is the reason why the possessive form lost its apostrophe.

English has many confusing homophones, which are words that sound the same but are written differently and have different meanings. Two of the most easily confused homophones are its and it’s. Though these two small words look very similar, that apostrophe completely changes the meanings.

In English, apostrophes have two main functions. They connect words in contractions, and they show possession. But its and it’s are exceptions to these rules. It’s is a contraction, but it is not the possessive form of "it".

It’s
It’s means "it is". This is a contraction, and the apostrophe replaces the letter "i" in "is". Here are some examples of how to use this word.

• It’s beginning to look a lot like Christmas.

• Let me know when it’s over.

• It’s going to be a long day.

• The weatherman said it’s going to be eighty degrees next week!

Its
Its is the possessive form of "it". Normally, we use apostrophes to show possession, but itsdoesn't need one.

• Its fur is a lovely shade of brown.

• Give the dog its bone.

• The tree had a heart carved in its trunk.

• The city has decorated all of its official buildings.

It’s vs. Its
Sometimes both of these words are used in the same sentence. It’s important to use the correct form in writing for clarity since they have very different meanings.
Remember, only use it's when you can replace it with the words "it is".

• That silly dog! It’s going to hurt its paw if it doesn’t stop digging in the backyard!

• It’s time to give the car its annual tune-up.

Let's take a closer look.
Examples of "its"

• Its mouth opened wide like a dark cave.

• That was the second time I saw its effects.

• When you see its eyes open, you should run.

You can test whether you need its [noun] by substituting the [noun] of it and seeing if the sentence still works. Taking the first example above, "The mouth of it" makes sense, so we know "Its mouth" is correct.
Examples of "it's"

• It's time to leave right now.

• Make sure it's written correctly this time.

• There's no doubt it's the best option.

Remember, if you can write "it is" instead, then use "it's".