Standard Deduction
Standard Deduction
Quick Definition
The standard deduction is a flat dollar amount set by the IRS that you subtract from your adjusted gross income to reduce your taxable income. You do not need to track or document individual deductible expenses to claim it. About 90% of American taxpayers take the standard deduction instead of itemizing.
Taxable Income = AGI minus Standard Deduction (or Itemized Deductions, whichever is larger)
What It Means
Every dollar of income you earn is not taxed equally. The IRS gives every taxpayer a "free" deduction: a flat amount that reduces your taxable income before the tax brackets apply. You do not need receipts, mortgage statements, or charity records to claim it. You just check a box on Form 1040.
The alternative is itemizing deductions, where you add up individual deductible expenses (mortgage interest, state taxes, charitable contributions, medical expenses) and deduct that total instead. You always take whichever number is larger.
The Tax Cuts and Jobs Act (TCJA) of 2017 nearly doubled the standard deduction, which dramatically reduced the share of taxpayers who itemize. That change was originally set to expire at the end of 2025. The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, made the larger standard deduction permanent. It also raised the 2025 amounts above the originally scheduled inflation adjustments and further increased them for 2026.
2025 and 2026 Standard Deduction Amounts
The OBBBA increased the 2025 standard deduction above what the IRS had originally announced, and the 2026 amounts reflect additional inflation indexing.
| Filing Status | 2025 Standard Deduction | 2026 Standard Deduction |
|---|---|---|
| Single | $15,750 | $16,100 |
| Married Filing Jointly | $31,500 | $32,200 |
| Married Filing Separately | $15,750 | $16,100 |
| Head of Household | $23,625 | $24,150 |
The 2026 amounts increased roughly 2.2% from 2025, in line with the chained CPI-U inflation adjustment the IRS uses for most tax parameters.
Additional Standard Deduction (Age 65+ or Blind)
Taxpayers who are 65 or older, or legally blind, receive an additional standard deduction on top of the base amount. For 2026:
| Status | Additional Amount (2026) |
|---|---|
| Single or Head of Household (65+ or blind) | +$2,050 |
| Single or Head of Household (65+ AND blind) | +$4,100 |
| Married (per qualifying spouse, 65+ or blind) | +$1,650 |
| Married (both spouses 65+) | +$3,300 total addition |
Example: A married couple both aged 68 in 2026 get $32,200 + $1,650 + $1,650 = $35,500 standard deduction.
Standard Deduction vs. Itemized Deductions
The choice is mechanical: take whichever is larger.
| Choose Standard Deduction When | Choose Itemized Deductions When |
|---|---|
| Your deductible expenses are less than the standard deduction | Mortgage interest plus state taxes plus charitable giving exceed the standard amount |
| You rent (no mortgage interest deduction) | You have a large mortgage with significant interest |
| You live in a low-tax state | You live in a high-tax state and can benefit from the raised SALT cap |
| Simple financial situation | Major medical expenses exceeding 7.5% of AGI |
| Lower to middle income | High charitable contributions (note: new 0.5% AGI floor applies in 2026) |
Common itemized deductions include:
- Mortgage interest (Form 1098)
- State and local taxes (SALT), capped at $40,400 for 2026
- Charitable contributions (cash and non-cash)
- Medical expenses exceeding 7.5% of AGI
- Casualty and theft losses (limited)
The SALT Cap: What Changed in 2025 and 2026
The TCJA originally capped the state and local tax (SALT) deduction at $10,000. The OBBBA raised this cap significantly, which changes the itemizing calculus for taxpayers in high-tax states.
| Tax Year | SALT Cap | Phaseout Starts (MAGI) | Floor |
|---|---|---|---|
| 2018-2024 | $10,000 | None | $10,000 |
| 2025 | $40,000 | $500,000 (joint) / $250,000 (single) | $10,000 |
| 2026 | $40,400 | $505,000 (joint) / $252,500 (single) | $10,000 |
| 2027-2029 | Increasing 1% annually | Increasing 1% annually | $10,000 |
| 2030 | Reverts to $10,000 | None | $10,000 |
The phaseout reduces the cap by 30 cents for every dollar of MAGI above the threshold. A married couple with $550,000 MAGI in 2026 would see their cap reduced by $13,500 (30% of $45,000), leaving a $26,900 SALT cap. Above approximately $635,000 MAGI, the cap bottoms out at $10,000.
This change reopens the door to itemizing for some households in New York, California, and New Jersey. Under the old $10,000 cap, many high-tax-state residents could not itemize because their SALT deduction alone was not enough to exceed the standard deduction. With a $40,400 cap, the math shifts.
New for 2026: The 2/37 Reduction on Itemized Deductions
Starting in 2026, taxpayers in the highest tax bracket (37%) face a new limitation on itemized deductions. Most itemized deductions (excluding SALT, which has its own phaseout rules) are reduced by a fraction of 2/37, approximately 5.4%. This reduction applies to mortgage interest, charitable contributions, and other Schedule A deductions.
For example, a taxpayer in the 37% bracket with $50,000 in itemized deductions (excluding SALT) would lose $2,700 of deduction value. Combined with the new 0.5% AGI floor on charitable contributions, high-income itemizers face tighter limits than in prior years.
Standard Deduction Inflation Adjustments Over Time
| Year | Single | MFJ | Head of Household |
|---|---|---|---|
| 2017 (pre-TCJA) | $6,350 | $12,700 | $9,350 |
| 2018 (TCJA doubled) | $12,000 | $24,000 | $18,000 |
| 2020 | $12,400 | $24,800 | $18,650 |
| 2022 | $12,950 | $25,900 | $19,400 |
| 2023 | $13,850 | $27,700 | $20,800 |
| 2024 | $14,600 | $29,200 | $21,900 |
| 2025 (OBBBA) | $15,750 | $31,500 | $23,625 |
| 2026 | $16,100 | $32,200 | $24,150 |
Who Cannot Take the Standard Deduction
The standard deduction is unavailable in limited situations:
- Married filing separately, if your spouse itemizes
- Nonresident aliens
- Estates and trusts
- Short tax years (partial years)
How the Standard Deduction Saves You Money
The standard deduction reduces your taxable income dollar for dollar. The actual tax savings depend on your marginal tax rate.
Example: A single filer with $75,000 in AGI for 2026 takes the $16,100 standard deduction. Taxable income drops to $58,900. At the 22% marginal rate, that deduction saves $3,542 in federal income tax. If this filer instead itemized and could only document $8,000 in deductions, they would pay taxes on $67,000 and lose $1,782 in potential savings.
This is why the standard deduction matters: it is free money on your tax return, no receipts required. Use the tax bracket calculator to model your own situation.
Key Points to Remember
- The standard deduction reduces taxable income by a flat amount based on filing status
- 2026: $16,100 single / $32,200 married filing jointly / $24,150 head of household
- OBBBA made the doubled standard deduction permanent in July 2025
- Take the standard deduction if it exceeds your total itemized deductions
- The SALT cap rose to $40,400 for 2026, with a phaseout above $505,000 MAGI for joint filers
- Age 65+ and blind taxpayers receive an additional standard deduction ($1,650 or $2,050 in 2026)
- About 90% of taxpayers take the standard deduction
Common Mistakes to Avoid
- Forgetting above-the-line deductions: You can deduct student loan interest (up to $2,500), HSA contributions, IRA contributions, and self-employed health insurance even if you take the standard deduction. These are above-the-line deductions that reduce AGI before the standard vs. itemized choice.
- Assuming you cannot itemize anymore: The raised SALT cap ($40,400 in 2026) means some high-tax-state residents may now benefit from itemizing. Run the numbers instead of defaulting to the standard deduction.
- Overlooking the additional deduction for age or blindness: If you turned 65 during the tax year, you qualify for the extra deduction. Many seniors miss this.
- Not adjusting withholding after life changes: Getting married, divorced, or widowed changes your filing status and standard deduction amount. Update your W-4 to avoid surprises.
- Ignoring state-level differences: Some states have their own standard deduction amounts that differ from federal. Your state return may require separate calculations.
Frequently Asked Questions
Q: Can I take the standard deduction and also deduct student loan interest? A: Yes. Student loan interest (up to $2,500) is an above-the-line deduction that reduces AGI. It is taken before the standard vs. itemized choice. The same applies to IRA contributions, HSA contributions, and self-employed health insurance deductions.
Q: Did the TCJA provisions expire at the end of 2025? A: No. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made the TCJA individual provisions permanent. The doubled standard deduction, the seven-bracket rate structure, and the $0 personal exemption all continue without a sunset date. The SALT cap increase, however, is temporary and reverts to $10,000 in 2030.
Q: Should I ever itemize if the standard deduction is higher? A: No. You should always take the higher deduction. The only exception is if you are married filing separately and your spouse itemizes. In that case, you are required to itemize regardless.
Q: How does the new SALT cap affect whether I should itemize? A: If you live in a high-tax state and your combined state income tax and property tax exceeds $10,000, the raised cap ($40,400 for 2026) may make itemizing worthwhile for the first time since 2018. Add your SALT, mortgage interest, and charitable contributions. If the total exceeds your standard deduction, itemize.
Q: What is the 2/37 reduction on itemized deductions? A: Starting in 2026, taxpayers in the 37% bracket must reduce most itemized deductions (except SALT) by 2/37, or about 5.4%. This is a separate limitation from the SALT cap phaseout and the new 0.5% AGI floor on charitable contributions. High-income itemizers should model all three limitations together.
Source: IRS Revenue Procedure 2025-32 and the One Big Beautiful Bill Act (P.L. 119-21). Consult a tax professional for your specific situation.
Related Terms
Tax Deduction
A tax deduction reduces your taxable income, lowering the amount subject to federal tax. For 2026, the standard deduction is $16,100 (single) or $32,200 (MFJ), and the SALT cap rises to $40,400 under the OBBBA.
Taxable Income
Taxable income is the portion of your income subject to federal income tax after subtracting all allowable deductions from your AGI, the number your tax bracket rates are actually applied to.
Tax Bracket
A tax bracket is the range of income taxed at a specific rate in the U.S. progressive tax system. For 2026, seven brackets range from 10% to 37%, with rates made permanent by the One Big Beautiful Bill Act.
Tax Return
A tax return is the official form filed with the IRS each year that reports income, deductions, and credits to calculate the amount of tax owed or refund due, the annual financial reckoning between individual taxpayers and the government.
AGI (Adjusted Gross Income)
Adjusted Gross Income is your total gross income minus specific above-the-line deductions, determining eligibility for tax credits, deductions, and retirement contributions.
1040
Form 1040 is the standard IRS tax form used by individual taxpayers to file their annual federal income tax return, summarizing income, deductions, credits, and the resulting tax owed or refund due.
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