In general, the standard deduction is adjusted each year for inflation and varies according to your filing status, whether you're 65 or older and/or blind, and whether another taxpayer can claim you as a dependent. The standard deduction isn't available to certain taxpayers.
You subtract your Standard Deduction directly from your adjusted gross income. If you do not wish to use the Standard Deduction, you can claim itemized deductions. Doing so takes additional time, but that extra effort can result in big tax savings, especially if you have big deductions like mortgage interest.
Standard deduction 2025 (taxes due 2026)
The standard deduction for 2025 is $15,000 for single filers and married people filing separately, $22,500 for heads of household, and $30,000 for those married filing jointly and surviving spouses.
Standard deduction vs.
Some of the common ones include home mortgage interest on up to $750,000 in principal ($375,000 if married filing separately), up to $10,000 of state and local taxes ($5,000 if married filing separately), medical and dental expenses that exceed 7.5% of your AGI, and eligible charitable donations.
The standard deduction reduces a taxpayer's taxable income. It ensures that only households with income above certain thresholds will owe any income tax. Taxpayers can claim a standard deduction when filing their tax returns, thereby reducing their taxable income and the taxes they owe.
Your AGI is calculated before you take your standard or itemized deduction on Form 1040.
Unlike standard deductions, itemizing is a manual process that requires gathering documentation and tallying expenses. Depending on how good your records are and the amount of your deductions, this time-consuming process might not reduce your taxable income enough to make it worth the effort.
The federal individual income tax has seven tax rates ranging from 10 percent to 37 percent (table 1). The rates apply to taxable income—adjusted gross income minus either the standard deduction or allowable itemized deductions. Income up to the standard deduction (or itemized deductions) is thus taxed at a zero rate.
The standard deduction in 2024 is $14,600 for individuals, $29,200 for joint filers, and $21,900 for heads of households. The IRS adjusts the standard deduction each year for inflation. The amount of your standard deduction is based on your filing status, age, and other criteria.
You cannot take the standard deduction if: You are a married individual filing as married filing separately whose spouse itemizes deductions. You are an individual who files a tax return for a period of less than 12 months because of a change in your annual accounting period.
Percentage deductibles generally only apply to homeowners policies and are calculated based on a percentage of the home's insured value. Therefore, if your house is insured for $100,000 and your insurance policy has a 2 percent deductible, $2,000 would be deducted from any claim payment.
To reap the benefits of deductions without the hassle of itemization, Backman notes you'll need line items that fall into these categories — contributions to your IRA, contributions to your HSA (health savings account), expenses you incur as a teacher like purchasing classroom supplies, and interest on student loans.
Other Tax Deductions
Unreimbursed job expenses, such as work-related travel and union dues. Unreimbursed moving expenses if you had to move in order to take a new job (exception: active-duty military moving because of military orders) Most investment expenses, including advisory and management fees.
If your state and local taxes—including real estate, property, income, and sales taxes—plus your mortgage interest exceed the Standard Deduction, you might want to itemize. If you paid more than 7.5% of your adjusted gross income for out-of-pocket medical expenses, you might be able to deduct the amount above 7.5%.
The itemized tax deduction amount is determined by adding all applicable deductions and subtracting the sum from your adjusted gross income. Common and allowable itemized deduction items include: Casualty and theft losses from a federally declared disaster. Charitable donations.
The standard deduction is a specific dollar amount that reduces the amount of taxable income. The standard deduction consists of the sum of the basic standard deduction and any additional standard deduction amounts for age and/or blindness. In general, the IRS adjusts the standard deduction each year for inflation.
Social Security benefits are included in your adjusted gross income (AGI) if your total income, which consists in half of your Social Security benefits and other sources of income, exceeds a certain threshold.
Unemployment compensation generally is taxable. Inheritances, gifts, cash rebates, alimony payments (for divorce decrees finalized after 2018), child support payments, most healthcare benefits, welfare payments, and money that is reimbursed from qualifying adoptions are deemed nontaxable by the IRS.
This includes wages, dividends, capital gains, business and retirement income and all other forms of income. Examples of income include tips, rents, interest, stock dividends, etc. To figure your adjusted gross income, take your gross income and subtract certain adjustments such as: Alimony payments.
Taxpayers 65 and older qualify for an additional standard deduction, reducing their taxable income. The extra deduction amount differs based on filing status and whether the taxpayer or spouse is blind.
There are a few methods recommended by experts that you can use to reduce your taxable income. These include contributing to an employee contribution plan such as a 401(k), contributing to a health savings account (HSA) or a flexible spending account (FSA), and contributing to a traditional IRA.