Tax deductions are a powerful tool that help individuals reduce their taxable income and pay less in taxes each year. There are a variety of deductions available for everything from your charitable contributions to your investment losses. But the most common deduction — the one anyone can qualify for — is the standard deduction.

As a taxpayer, it’s helpful to understand what the standard deduction is, how it helps you reduce your tax liability, and how it affects your ability to claim other tax deductions.

What is a standard deduction?

The standard deduction is a fixed dollar amount that reduces the portion of your income on that you’re taxed. It’s subtracted from your adjusted gross income (AGI) when you’re calculating your federal income taxes.

The standard deduction has several clear benefits. First, it allows any taxpayer to reduce their taxable income and, therefore, the amount they’ll pay in taxes. It’s the only standard deduction that’s available to everyone.

The standard deduction also helps simplify the tax process. Without the standard deduction, more taxpayers would end up itemizing deductions. Itemizing deductions can be a complex process that requires more extensive documentation.

It is still in certain taxpayers’ best interest to itemize their deductions rather than claiming the standard deductions. However, those taxpayers generally have more complex tax situations and higher expenses that make the additional paperwork worth it.

The standard deduction changes each year and varies depending on your tax filing status. There’s a separate standard deduction for married couples filing jointly, single filers and married couples filing separately, and heads of household.

Read more: What are the tax benefits of marriage?

How does the standard deduction work?

A tax deduction works by directly reducing your taxable income. As a result, less of your income is subject to income taxes and you have a lower tax liability for the year.

Suppose you have an income of $50,000 and qualify for a tax deduction of $5,000. You would subtract the $5,000 from your income, meaning only $45,000 of your income is subject to taxation.

Depending on your situation, the standard deduction may be even more impactful than just reducing the amount of your income that’s subject to taxes. Someone who is just over the edge of a higher tax bracket might be pushed down into a lower tax bracket by the standard deduction. So not only do they reduce the amount of income they pay taxes on, but they also reduce the rate at which they’re taxed on their highest income.

The standard deduction differs from other tax deductions because you don’t have to do anything to qualify other than choose the standard deduction instead of itemizing your deductions. However, while the standard deduction may be impactful for taxpayers in lower tax brackets, high-income earners may benefit more from itemizing.

Determining your standard deduction

Your standard deduction is determined by your filing status. There are five primary filing statuses:

• Single
• Married filing jointly
• Married filing separately
• Head of household
• Qualifying widow(er)

There are also some situations that could increase or decrease your standard deduction. For example, individuals who are blind or who are 65 and older qualify for an increased standard deduction. On the other hand, taxpayers who can be claimed as a dependent by another taxpayer often have a reduced standard deduction.

Though the standard deduction¹ is available to nearly everyone, there are a few situations where someone wouldn’t be able to claim it:

• Itemizing deductions: The most common situation where someone wouldn’t be able to claim the standard deduction is if they are itemizing their tax deductions.
• Married filing separately: If you and your spouse file separately and one spouse chooses to itemize their deductions, both spouses must itemize their deductions.
• Special entities: You can’t claim the standard deduction for a special entity such as an estate or trust, a common trust fund, or a partnership.
• Short tax year: If you file a return for a period of less than a year due to a change in your annual accounting period, you can’t claim the standard deduction.
• Nonresident or dual-status alien: Nonresident aliens and dual-status taxpayers can’t claim the standard deduction except for certain exceptions.

Read more: How married filing separately works & when to do it

Standard deduction amounts for 2023 and 2024

The table below shows the standard deduction for different filing statuses in both 2023 and 2024.²

Filing status	2023	2024
Single or Married Filing Separately	$13,850	$14,600
Married Filing Jointly, Qualifying Widow(er)	$27,700	$29,200
Head of Household	$20,800	$21,900

 

The standard is adjusted each year based on inflation. As you can see, there will be an increase in 2024, in part due to inflation we’ve experienced in recent years.

Standard deduction and Tax Cuts and Jobs Act

Historically, the standard deduction has been far lower than it is today. The 2017 Tax Cuts and Jobs Act made many changes to our tax system — many of them temporary. One of the biggest changes for individual taxpayers was to increase the standard deduction from $6,500 to $12,000 while eliminating personal exemptions.³

However, the changes to the standard deduction under the Tax Cuts and Jobs Act were temporary. Unless Congress takes action to make the changes in the bill permanent, the standard deduction will be halved starting in 2025 and personal exemptions will be reinstated.

Standard deduction vs. itemized deduction

When you file your federal tax return, you’ll have two options: claiming the standard deduction or itemizing your deductions. Claiming the standard deduction is the simplest option. And for most taxpayers, the standard deduction will offer the greatest tax savings, especially with the increased standard deduction through 2024.

However, for some people, itemizing deductions is a better option. Itemizing your deductions allows you to claim certain deductions that you wouldn’t be able to claim if you claimed the standard deduction. And for high-income earners with high spending, itemizing deductions may often result in greater tax savings.

Some of the deductions available⁴ if you choose to itemize include:

• Medical and dental expenses
• State and local taxes
• General sales taxes
• Home mortgage interest and points
• Real estate and property taxes
• Charitable contributions
• Gambling losses
• Moving expenses

It’s worth noting that even if you claim the standard deduction, there are still some other deductions you’re eligible for. These deductions are known as above-the-line deductions or adjustments to income. They reduce your taxable income to help you calculate your AGI. Deductions you’re eligible to claim alongside the standard deduction include:

• Educator expenses
• Student loan interest
• Tuition and fees
• Alimony payments (only for divorce agreements made before December 31, 2018)
• Retirement contributions
• HSA contributions

Choosing between the standard deduction and itemizing

For most people, claiming the standard deduction provides the greatest tax savings, at least until the standard deduction is reduced starting in 2025. In fact, according to the IRS, more than 87% of taxpayers claimed the standard deduction in 2018.⁵ But if you’re eligible for a large number of itemized deductions, itemizing may be worth the effort.

The easiest way to determine whether you should claim the standard deduction or itemize your deductions is to run the numbers both ways. If you use tax software, the software probably already does this on your behalf. It takes the information you provide and determines which avenue provides the most tax savings. Similarly, if you hire a tax professional, they’ll be able to tell you which route makes the most sense.

If you file your own taxes, complete — but don’t file — two separate returns, one where you claim the standard deduction and one where you itemize deductions. Once you see which provides the greatest tax savings, you’ll know which to go forward with.

Keep in mind that even if one method has always been most cost-effective for you, you shouldn’t assume that will always be the case. For example, many people claim the standard deduction for many years, but then eventually reach a point in their lives when itemizing deductions makes more sense. Likewise, someone may find better tax savings by itemizing deductions, but then their financial situation simplifies, and suddenly claiming the standard deduction provides better savings.

Each year, start fresh and run the numbers both ways to see which option helps reduce your taxable income the most.

Additional standard deduction for seniors and blind individuals

The IRS offers an increased standard deduction to individuals who are 65 and older or who are blind.

The table below shows the standard deduction for each circumstance and filing status for both 2022 (which were due in April 2023) and 2023 (which will come due in April 2024).

	2022	2023
Single or head of household
65 or older or blind	$1,750	$18,50
65 or older and blind	$3,500	$3,700
Married filing jointly or married filing separately
65 or older or blind	$1,400 per qualifying taxpayer	$1,500 per qualifying taxpayer
65 or older and blind	$2,800 per qualifying taxpayer	$3,000 per qualifying taxpayer

 

Keep in mind that the additional standard deduction for seniors and blind individuals is on top of the normal standard deduction. For example, someone who was single, 65 years old, and not blind could claim a standard deduction of $15,700 for 2023 — $13,850 for their normal deduction and $1,850 for being 65 or older.

Record-keeping and IRS audits

Regardless of your tax situation, proper record-keeping is critical. First, it’s important to keep all relevant financial and tax documents throughout the year to help you file your taxes the following spring. Having thorough records will make it easier for you or your accountant to file your taxes accurately.

However, you should maintain financial records even after you’ve filed your taxes for the year. The IRS can generally audit tax returns from the past three years. However, if they find significant errors, they may go back as far as six years.⁶

The IRS recommends keeping tax records for at least the period of time in which you can amend your tax return or the IRS can assess additional tax. For most records, that means three years. However, there are some records you should keep for longer periods, such as claims of worthless securities, bad debt reduction, fraudulent returns, employment taxes, and more.⁷

Making informed decisions

To ensure you can make informed decisions, it’s important to have the right information and experts by your side. First, seek advice from tax professionals when you have questions about your specific situation. While articles such as this one can provide general advice, they can’t speak to your unique situation.

Additionally, you can turn to the IRS for tax information. The IRS has a library of educational tools and resources to help you prepare for tax season and learn about various tax topics to ensure you’re prepared when Tax Day rolls around.

The bottom line

If you’ve filed income tax returns before, there’s a good chance you’ve claimed the standard deduction. It’s what most people claim when they file their taxes and often provides the greatest tax savings. This deduction allows you to reduce your taxable income by anywhere from $13,850 to $27,700 in 2023, helping you reduce your tax liability.

However, personal finances — including taxes — should never be a one-size-fits-all approach. It’s important to run your own numbers to determine what tax solution makes the most sense for you. Yes, you might find that the standard deduction is the best choice, but you could also find that you get more tax savings from itemizing your deductions.

 

 

 RO3148373-1023

1 IRS, “Topic No. 551, Standard Deduction,” April 2023.

2 IRS, “IRS provides tax inflation adjustments for tax year 2023,” October 2022.

3 Tax Policy Center, “Key Elements of the U.S. Tax System,” 2022.

4 IRS, “Credits and Deductions for Individuals,” September 2023.

5 IRS, “SOI Tax Stats — Tax Stats-at-a-Glance,” August 2023.

6 IRS, “IRS Audits,” August 2023.

7 IRS, “How long should I keep records?,” July 2023.