Understand the IRS standard deduction, a straightforward option for reducing taxable income without needing detailed documentation. Delve into eligibility, amounts for 2023-2024, and considerations for itemizing versus standard deduction.
By Brad Nakase, Attorney
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You have two main options from the IRS to reduce your taxable income: itemize or accept the standard deduction. Although itemizing requires more work than the standard deduction, which is why most taxpayers choose it, it’s not always the best option.
Here’s a brief rundown of the definition of standard deduction, eligible taxpayers, and amounts for the tax years 2023 and 2024. Discover how to compute the standard deduction for dependents as well as the additional amounts available to individuals 65 and over.
The IRS allows you to deduct a certain amount, known as the standard deduction, from your adjusted gross income in order to reduce the amount of income that is subject to taxation. Your tax filing status often determines the standard deduction amount that you are eligible for.
Some taxpayers typically receive a larger standard deduction, sometimes known as an enhanced standard deduction, such as those who are blind or 65 years of age or older. However, you can receive a smaller standard deduction if you are eligible to be claimed as a dependent.
Most people are allowed to use the standard deduction by the IRS without asking any questions, even if they do not have any other eligible deductions or tax credits. However, there are a few circumstances in which certain taxpayers might not be able to accept it.
Example of standard deduction: Jen and Rob, a married couple with an AGI of $120,000, are filing jointly for their 2023 taxes. They are eligible for the $27,700 standard deduction. Due to this tax break, their taxable income is now $92,300 ($120,000 – $27,700).
On your tax return, you can itemize or accept the standard deduction. The standard deduction is a fixed amount that you can take from your AGI without providing the IRS with any documentation. Itemized deductions also decrease your taxable income, but in another manner.
In essence, IRS-approved individual expenses known as “itemized deductions” can lower your taxable income. These charges may consist of items like company miles, property taxes, and some unpaid medical expenses.
You are unable to deduct home mortgage interest or certain forms of tax breaks if you choose to accept the standard deduction. However, in the event that the IRS chooses to audit you, you should keep the documentation that substantiates your deductions if you itemize.
For singles and married couples filing separately in 2023, the standard deduction is $13,850; for married couples filing jointly, it is $27,700; and for heads of household, it is $20,800. Tax returns submitted by April 2024 include a claim for it.
The standard deduction for single taxpayers and married couples filing separately is $14,600 for the 2024 tax year, an increase of $1,500 from the previous year. Heads of household are able to deduct $21,900, and married joint filers may deduct $29,200. On tax returns filed in 2025, the 2024 standard deduction is deducted.
Individuals who meet the IRS definition of blindness and who are 65 years of age or older are eligible to receive a standard deduction amount in addition to their current base standard deduction. The additional amount is determined by the criteria that apply and the filing status.
You have to turn 65 by the end of the tax year in order to qualify for the age-based extra standard deduction. The IRS stipulates that you must be entirely blind or obtain a declaration from an eye specialist attesting to your vision being 20 degrees or less, or that you have vision of less than 20/200 in your better eye, in order to be eligible for the extra standard deduction for blindness. If the aforementioned conditions can be corrected with contact lenses but you are incapable of wearing them because of pain or infection, you can also be eligible.
Your standard deduction is based on your earned income if you file taxes but continue to be claimed as a dependent by another person. You can claim a flat $1,250 for the 2023 tax year, or you can claim the amount of your earned income plus an additional $400. If you choose option number two, keep in mind that the total amount you choose cannot be greater than the standard deduction for your tax filing status.
The standard deduction for dependents increases to $1,300 for the 2024 tax year, or earned income plus $450, up to the highest standard deduction amount allowed for that tax filing status.
For most people, the standard deduction is a pleasant tax reduction, but there are a few circumstances in which you might be unable to claim it.
Your spouse has opted to itemize, and you are a married couple filing separately. The next step is to itemize.
As a partnership, estate, or trust, you are submitting a return.
Due to adjustments in accounting periods, your return is for a period that is shorter than a year.
You are regarded as a “dual-status alien” or “nonresident alien” of the United States (although there are certain exclusions; refer to Publication 519).
As you may have observed, there is a several hundred-dollar difference between the standard deduction levels for the tax years 2023 and 2024. This is due to the fact that the IRS modifies some tax laws, such as the standard deduction, annually to reflect inflation. As the cost-of-living increases, these yearly inflation adjustments serve to guarantee that people still benefit from some tax reductions. For instance, this implies that the standard deduction for single taxpayers will rise by $750 in 2024 (tax returns filed in 2025) and by $1,500 for married couples filing jointly.
You should definitely itemize and save money if your basic deduction is lower than your itemized deductions. It might be worthwhile to take the standard deduction in order to save time if it exceeds your itemized deductions.
Take a quick look at this. It’s worth checking to see if itemizing will save you money if you have a home equity loan or mortgage, even though utilizing the standard deduction is simpler. Study the figures from IRS Form 1098, also known as the Mortgage Interest Statement (which you would normally receive at the end of the year from your mortgage provider). Examine the difference between your mortgage interest deduction and the standard deduction.
Explore further itemized deductions. Before deciding whether to itemize, getting acquainted with the tax code is also necessary. Should you discover that a significant portion of your expenses are eligible for itemized deductions, it is worthwhile to add up those costs and determine whether they could result in greater savings. Certain business, medical, or relocating expenses, charitable contributions, state income taxes, sales taxes, and property taxes are a few examples of possibly qualifying itemized deductions.
Run the figures both ways. It’s likely worth the time to respond to all of the itemized deduction questions that may be relevant to you if you’re using tax software. Why? Your tax professional or the software may analyze your return either way to determine which approach results in a smaller tax bill. In the event that you choose to take the standard deduction, at least you will be aware of your financial advantage.
When comparing standard deduction vs itemized deduction, consider which option offers the greater tax savings.
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