Standard deduction
The flat dollar amount the IRS lets every filer subtract from AGI to arrive at taxable income, regardless of actual expenses. Indexed annually for inflation and varies by filing status. The default choice for ~90% of US households post-2017.
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The standard deduction is one of two paths to reduce taxable income (the other is itemizing on Schedule A). Filers take whichever produces the larger deduction; the two are mutually exclusive on a given return. The standard deduction requires no documentation, no receipts, no specific expenses — every filer is eligible by virtue of filing status alone. The IRS publishes the current-year amounts each fall for the following tax year in Publication 501 and on Form 1040 instructions. The Tax Cuts and Jobs Act of 2017 roughly doubled the standard deduction, and the One Big Beautiful Bill Act (enacted July 4, 2025) made that larger deduction permanent — for 2026 it is $16,100 single, $32,200 married filing jointly, and $24,150 head of household.
The standard deduction varies by five factors: filing status (single, married filing jointly, married filing separately, head of household, qualifying surviving spouse), age 65 or older (extra amount per qualifying taxpayer), blindness (extra amount per qualifying taxpayer), dependency status (filers who can be claimed as someone else's dependent face a different rule and a lower amount), and certain narrow special situations (estate trustees, non-resident aliens) that follow distinct rules entirely. For typical individual filers, the published amount by filing status (with age/blindness adders if applicable) is the figure to use.
The decision rule for taking standard vs itemizing is mechanical: sum your three biggest potential itemized deductions (state and local taxes — capped at $40,000 for 2025–2029 under the One Big Beautiful Bill Act, up from the old $10,000 limit — mortgage interest, charitable contributions). If the sum is comfortably below your standard deduction, take standard and skip Schedule A. If it is close to or above standard, fill out the full Schedule A to compare — smaller items (medical expenses above 7.5% AGI, casualty losses in federally declared disaster areas, investment interest, gambling losses up to gambling winnings) can push you over. For roughly 90% of US households post-TCJA, the back-of-envelope sum gives the answer without filling the form.
Above-the-line deductions (traditional IRA contributions, HSA contributions, half-SE-tax deduction, student loan interest up to $2,500, educator expenses) reduce AGI directly and are available regardless of standard-vs-itemized choice. Below-the-line items like the QBI (qualified business income) deduction up to 20% of pass-through income also stack with the standard deduction. So taking standard does not preclude these other benefits — the standard deduction is the alternative to Schedule A specifically, not to other deductions.
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- AGI (Adjusted Gross Income) AGI is your total gross income for the tax year minus a specific set of statutory adjustments listed on Schedule 1 of Form 1040. It is the figure on which most tax calculations and eligibility tests downstream actually operate — not your gross income, not your taxable income.
- MAGI (Modified Adjusted Gross Income) MAGI is your AGI with specific deductions and exclusions added back in. The exact items added back depend on which tax provision is testing eligibility — there is no single universal MAGI. The two most commonly encountered versions are the IRA-deduction MAGI and the Premium Tax Credit MAGI.
- SALT cap (state and local tax deduction limit) The federal cap on the Schedule A deduction for combined state and local taxes paid (income, sales, property). Set at $10,000 by the Tax Cuts and Jobs Act of 2017 and temporarily raised to $40,000 for 2025–2029 by the One Big Beautiful Bill Act, it is the single largest swing factor in the itemizing decision for high-state-tax homeowners.
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