What is the standard deduction for federal income tax purposes?

The standard deduction for individuals is a deduction developed under the tax code as an “average” deduction for individuals who either cannot or do not want to itemize deductions.  It is a flat amount that you can use to reduce your taxable income. Starting 2018 through 2025, thanks to the Tax Cuts and Jobs Act of 2017, the standard deduction is significantly increased for all taxpayers: for single and married filing separately filers, the amount is $12,000; married, filing jointly, $24,000; and head of household, $18,000. The amounts are higher if you or your spouse are blind or over age 65.

Itemize or take the standard deduction

Most taxpayers have the choice of 2 options when claiming deductions:  standard and itemization.  You can take one or the other, not both.  Both reduce your taxable income, which translates into a smaller tax bill. And you will want to use the one that saves you the largest amount of money. Standard requires no recordkeeping and is automatic unless you elect to itemize; itemization requires documentation and several of the categories of itemized deductions have nondeductible floors.

Everyone can take the standard deduction regardless of whether or not your deductible expenses add up to your standard deduction level.  Therefore you would only consider itemizing deductions if your deductible expenses, added together, are greater than your standard deduction for your filing status. If your standard deduction is more than your total itemized deductions, claim the standard deduction and you do not need to file a Schedule  A, Itemized Deductions, with your tax return.

Many more people are using the standard deduction instead of itemizing deductions because mortgage interest rates (the main component of itemized deductions for most taxpayers) are so low that many homeowners do not have enough itemized deductions to get above their standard deduction.

Whether to itemize each year or not varies from year to year.  Do the math.  Determine which scenario gives you the largest tax advantage.  Most tax preparation software will allow you to input your itemized expenses and automatically give you either the standard deduction or itemized expenses, whichever produces the best result.

IRS Pub 501 has a section that is helpful on who should itemize.

Case Studies: The Standard Deduction for Federal Income Tax

Case Study 1: Maximizing Tax Savings with the Standard Deduction

In this case study, an individual has various deductible expenses but wants to determine whether they should itemize deductions or take the standard deduction. By analyzing their total itemized deductions and comparing them to the standard deduction amount for their filing status, they can identify the option that provides the largest tax advantage. This case study emphasizes the importance of evaluating the available deductions to optimize tax savings.

Case Study 2: Choosing Between Itemization and the Standard Deduction

In this scenario, a homeowner contemplates whether to itemize deductions or claim the standard deduction. With low mortgage interest rates and limited itemized deductions, the homeowner realizes that the standard deduction may be more advantageous. The case study highlights the shift towards more taxpayers choosing the standard deduction due to its simplicity and potential tax benefits.

Case Study 3: Evaluating Itemized Expenses and Tax Advantages

In this case, an individual assesses their itemized expenses to determine if they should itemize deductions instead of taking the standard deduction. By calculating their total itemized deductions and comparing them to the standard deduction for their filing status, they can identify the approach that results in the greatest tax advantage. This case study emphasizes the importance of careful analysis and considering the math to make an informed decision.