When filing a tax return, one of the most important decisions taxpayers will make is whether to claim the standard deduction or itemize. However, what’s the best choice for a taxpayer one year may not always be best every year, which is why it’s a good idea to revisit the standard deduction each tax season.
For the 2024 tax year specifically, there have been some adjustments to this deduction that taxpayers will want to be aware of before they decide whether to take it or itemize their deductions instead.
Specifically, the standard deduction is the dollar amount that taxpayers are permitted to subtract from their income before income taxes are applied and calculated. By claiming the standard deduction, taxpayers can easily reduce their total taxable income. The specific amounts for the standard deduction can vary depending on whether the taxpayer is single, head of household or married and filing jointly.
Each year, the standard deduction is reassessed and may be adjusted based on factors like inflation. For the 2024 tax year specifically, the standard deduction has increased and is listed as follows:
Compared to 2023, the standard deduction for the 2024 tax year has increased anywhere from $750 to $1,500 (depending on filing status). This should help taxpayers keep a little more money in their pockets when it comes time to file.
For example, an individual who makes $65,000 per year and who claims the standard deduction as a single taxpayer would subtract $14,600 from their taxable income. As a result, just $50,400 of that income would be subject to federal income tax.
It is important for taxpayers to remember, though, that state taxes may work differently. Some states may have their own standard deductions that may differ from federal deductions, so it is critical for taxpayers to review both state and federal laws when preparing their tax returns.
When preparing a tax return, taxpayers have the option to either claim the standard deduction or itemize their deductions. When itemizing deductions, taxpayers must carefully document and calculate their related expenses. Some examples of expenses that are often itemized include mortgage interest, insurance and costs of doing business.
In general, if the total amount of your itemized expenses adds up to be more than the standard deduction, then you will save more money on your taxes by itemizing. However, many taxpayers elect to take the standard deduction because it’s much easier and less time-consuming to do so.
For those who are already planning ahead to account for taxes during the 2025 tax year, the IRS has also released standard deduction amounts for 2025. They are as follows:
Once again, these amounts are being adjusted based on inflation for 2025, with increases from the 2024 tax year ranging from another $400 to $800.
It is also worth noting that standard deduction amounts can differ for those who are filing taxes as a dependent, as a senior aged 65 or older or as somebody who is legally blind.
For those who are age 65 or older or who are legally blind, it may be possible to claim an additional standard deduction of $1,950. For those who fall into both categories, the deduction amount is effectively doubled to $3,900.
For those who can be claimed as dependents by another taxpayer, the standard deduction is also different. Specifically, the standard deduction for dependents in 2024 is limited to $1,300 or the dependent’s earned income plus $450, whichever is greater.
For many taxpayers who do not have complicated tax situations, taking the standard deduction is a practical and time-saving option. However, for those with lots of business expenses, medical expenses or other significant expenses, it could make more sense to itemize. For taxpayers who could use some further guidance in selecting the option that’s right for them, meeting with a financial advisor or tax consultant is an excellent option.
If you have any questions or would like additional information, please contact our tax professionals.