Deductions: Standard Deduction vs. Itemized Deductions
What is it?
You subtract certain deductions from your adjusted gross income (AGI) to determine your taxable income. You can subtract either the standard deduction or itemized deductions. The standard deduction is a fixed dollar amount determined according to your filing status and circumstances. Itemized deductions are the various deductions that are reported on Schedule A of Form 1040. Itemized deductions include medical and dental expenses, mortgage interest, state and local taxes, charitable deductions, and casualty losses. In most cases, you must decide whether taking the standard deduction or itemizing your deductions will be more beneficial.
Standard deduction
In general
The standard deduction is an established dollar amount, adjusted annually for inflation, that lowers your AGI. It's a deduction to which taxpayers who don't itemize are generally entitled. How much you may deduct depends in part on your filing status. The standard deduction amounts for tax year 2024 are:
|
Filing Status |
Standard Deduction |
|---|---|
|
Unmarried individuals |
$14,600 |
|
Married filing jointly and surviving spouses |
$29,200 |
|
Married filing separately |
$14,600 |
|
Head of households |
$21,900 |
The standard deduction amounts for tax year 2023 are:
|
Filing Status |
Standard Deduction |
|---|---|
|
Unmarried individuals |
$13,850 |
|
Married filing jointly and surviving spouses |
$27,700 |
|
Married filing separately |
$13,850 |
|
Head of households |
$20,800 |
Individuals age 65 and older and blind individuals
The standard deduction is more for some taxpayers. In 2024, if you and your spouse file jointly, you may take the standard deduction plus an additional $1,550 if one of you is age 65 or older ($3,100 if both you and your spouse are age 65 or older), and an additional $1,550 for each qualified incidence of blindness (as certified by a physician or optometrist). If your filing status is unmarried or head of household, you may take the standard deduction plus an additional $1,950 if you are age 65 or older, and an additional $1,950 if you are blind.
For tax year 2024, Jack, 62, and Jill, 47, are married, filing jointly. Neither is blind. They decide not to itemize their deductions. Their standard deduction is $29,200. If Jack was blind, their standard deduction would be $29,200 plus $1,550, or $30,750. If both were blind, their standard deduction would be $29,200 plus $3,100, or $32,300. If both were blind and Jack was also 65, their standard deduction would be $29,200 plus $4,650, or $33,850. If both were over 65 and blind, their standard deduction would be $29,200 plus $6,200, or $35,400.
Standard deduction for dependents
If you can be claimed as a dependent on another taxpayer's tax return, your standard deduction is generally limited to the greater of (a) $1,300, or (b) the sum of $450 and your earned income for the year but not more than the standard deduction you could otherwise have claimed (if you could not be claimed as a dependent by someone else).
In 2024, Jill's 72-year-old single father, John, has $16,550 of interest income. If John isn't Jill's dependent, he has no tax liability. His $16,550 standard deduction ($14,600 + $1,950) reduces his taxable income to zero. However, as Jill's dependent, John would see his standard deduction drop to $1,300. His taxable income would be $15,250. Jill might pay less tax, but no one will benefit from the remaining unused standard deduction.
Individuals filing married filing separately returns
If you file your tax return using the married filing separately status and your spouse itemizes deductions, you cannot take a standard deduction at all. Any deductions you take must be itemized.
Itemized deductions
Instead of claiming the standard deduction, you may wish to itemize your deductions. To itemize, you list and claim on Schedule A deductions for specific eligible expenses, such as medical and dental expenses, deductible taxes paid, deductible interest that you paid, charitable contributions, casualty losses, and other deductions. If you have enough of these types of expenses, your itemized deductions will exceed your standard deduction. Therefore, it will generally be to your advantage to itemize.
Should you itemize?
For a given tax year, you may take the standard deduction or choose to itemize, but you can't do both. Because you have a choice, you should take the deduction that lowers your tax liability the most. Figure out what your deduction would be if you itemized and compare it to the standard deduction for which you're eligible.
If any of the following apply, you can't take a standard deduction and must itemize:
- Your filing status is married filing separately, and your spouse itemizes
- You're filing a tax return for a short tax year because of a change in your annual accounting period
- You were a nonresident alien or dual-status alien during the year
If you are subject to the alternative minimum tax, it may be better to itemize deductions even if you only have a small amount of itemized deductions since the standard deduction is reduced to zero for alternative minimum tax purposes.
Special limits on itemized deductions (suspended for 2018 to 2025)
Itemized deductions are limited for high adjusted gross incomes (AGI)
You are subject to a limit on certain itemized deductions if your adjusted gross income (AGI) exceeds $261,500 (in 2017) for single taxpayers, $313,800 (in 2017) for married taxpayers filing jointly, $156,900 (in 2017) for married taxpayers filing separately, and $287,650 (in 2017) for heads of households. This overall limit on itemized deductions has been suspended for 2018 to 2025.)
Not all itemized deductions are affected
Except for the following exceptions, all itemized deductions are subject to the limit described above:
- Medical and dental expenses
- Investment interest expense
- Nonbusiness casualty and theft loss
- Gambling losses
Calculating allowable itemized deductions
If your AGI is more than the itemized deduction limit, you must reduce your total itemized deductions by the smaller of:
- 3 percent of the amount by which your AGI exceeds the itemized deduction limit
- 80 percent of your itemized deductions that are affected by the limit
Use the Itemized Deduction Worksheet in the IRS Form 1040 instructions to help you calculate this amount.
Remember to compare the amount of your allowable itemized deductions to your standard deduction amount. Use the deduction that lowers your tax liability the most.
