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The standard deduction is below-the-line and is subtracted from a taxpayer’s adjusted gross income (AGI). Typically, taxpayers have two options: Take the itemized deductions or take the standard deduction.
Whether you itemize deductions or take the standard amount, taxpayers will want to use the deduction method that results in the highest amount of deductions, since deductions reduce income that is subject to taxes.
As a result of the Tax Cuts and Jobs Act of 2017, most taxpayers now take the standard deduction. This legislation doubled the standard deduction amount and greatly reduced the amount of itemized deductions taxpayers can claim.
2022 standard deduction amounts
Here is the standard deduction for each filing type for tax year 2022.
|Filing status||2022 standard deduction amount|
|Head of household||$19,400|
|Married filing jointly||$25,900|
|Qualifying widow or widower||$25,900|
|Married filing separately||$12,950|
2023 standard deduction amounts
Here is the standard deduction for each filing type for tax year 2023.
|Filing status||2023 standard deduction amount|
|Head of household||$20,800|
|Married filing jointly||$27,700|
|Qualifying widow or widower||$27,700|
|Married filing separately||$13,850|
How the standard deduction works
The standard deduction reduces your taxable income to help lower your federal tax bill. The IRS updates the standard deduction amount each tax year to account for inflation. The amount you can deduct depends on your filing status, age and whether you are blind.
If you take the standard deduction, that exact dollar amount is deducted from your AGI. Then your tax rate is applied (along with any tax credits and other factors) to calculate your total taxes owed for the year. If the standard deduction reduces your AGI enough, a portion of your taxable income could drop into a lower tax bracket, saving you more on taxes.
The standard deduction applies to the tax year, not the year in which you file. For tax year 2022, for example, the standard deduction for those filing as married filing jointly is $25,900, up $800 from the prior year. But that deduction applies to income earned in 2022, which is filed with the IRS in 2023.
When to claim the standard deduction
If your standard deduction is more than your itemized deductions and saves you more money on your taxes, it makes sense to claim the standard deduction. But you must first calculate your itemized deduction before deciding which deduction to take.
The alternative to claiming the standard deduction is itemizing your deductions. This allows you to deduct the actual amount of certain expenses from your taxable income (up to IRS limits). Common itemized deductions include mortgage interest, some home equity loan interest, charitable contributions and eligible medical expenses. A big itemized deduction for many taxpayers is the state and local taxes (SALT) deduction. This is currently capped at $10,000 per year for most taxpayers as a result of the Tax Cuts and Jobs Act of 2017.
You must file a Form 1040 Schedule A form in order to tally your itemized deductions. Make sure you keep records of those items you deducted in case you’re audited by the IRS.
In order for it to make sense to itemize deductions on your tax return, the total amount of your itemized deductions should exceed the standard deduction for your filing status. For example, if you’re married and file jointly, your standard deduction would be $25,900 in 2022. That means your itemized deductions would need to exceed that dollar amount in order for it to make sense. Otherwise, it makes more financial sense to claim the standard deduction. Plus, there’s less paperwork and record-keeping to worry about.
Additional deductions to consider
There are some scenarios that allow for higher standard deductions. You may qualify for a larger deduction if you’re 65 years or older. You may also get a higher deduction if you’re considered legally blind. You’ll need to submit a letter from your optometrist in order to take the additional deduction.
Standard deductions for older, visually impaired taxpayers
The age and vision of each spouse is counted separately, meaning that an older couple could check up to four boxes, each worth an additional standard deduction. The final box count is used to figure the adjusted standard deduction amount.
For standard deduction amount purposes, if your 65th birthday was Jan. 1, the IRS considers you age 65 for the previous tax year and you may claim the larger standard deduction.
As for vision considerations, you may qualify for the larger deduction even if you are partially blind by attaching a letter from your physician attesting to your limited vision.
Standard deductions for dependent taxpayers
Sometimes you might file a return, for example, to get a refund of withheld money, even though you can be claimed as a dependent on someone else’s return.
In this case, a dependent taxpayer who is younger than 65 and not blind can take as a standard deduction the greater of $1,150 or their earned income plus $400. This deduction amount, however, cannot exceed the basic standard deductions for the dependent taxpayer’s filing status.
Although most taxpayers claim the standard deduction, all taxpayers may choose to itemize deductions and claim that amount if it is larger than their allowable standard deduction amount.
You must file Form 1040 and Schedule A to itemize.
Some itemized deductions are limited based on a taxpayer’s AGI. Others are restricted to a threshold, or percentage, of the filer’s AGI.
Taxpayers who make a certain amount also may not be able to deduct all of their itemized deductions. Many tax credits and deductions have phaseout limits at different thresholds.