Standard Deduction

Standard deduction is a fixed amount set by the IRS that reduces an individual’s taxable wages without requiring itemized deductions.

How does the standard deduction compare to itemizing deductions?

Employees can choose between taking the standard deduction or itemizing deductibles such as mortgage interest, medical expenses, and charitable contributions. For most, the standard deduction is more beneficial because it typically exceeds the total value of their itemized deductibles. Itemizing is a better option when total deductibles exceed the standard deduction for the employees' filing status.

Does standard deduction increase with inflation each year?

Yes, the standard deduction increases slightly each year to keep up with inflation. This helps maintain its value over time, providing consistent tax relief despite rising living costs.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.