When you file your tax return, you likely have the option to take the standard deduction to lower your taxable income. It’s an option the vast majority of eligible people choose. For tax year 2020, about 87% of taxpayers took the standard deduction instead of itemizing, or listing out every single deductible expense.1 It could be because taking the standard deduction makes your taxes less complicated; you don’t have to track or report any specific expenses. Still, it may not be the best choice for everyone.
Not sure if taking the standard deduction is right for you? Read on for more about how the standard deduction works and how it compares to itemizing.
What is the standard deduction?
The standard deduction allows many taxpayers to reduce their taxable income by an amount the IRS sets, based on their filing status. It’s the same amount for every eligible taxpayer using that same filing status—with a few exceptions below.
Standard deduction for 2023
The 2023 standard deduction is presented below for 4 of the most common filing statuses.
|Filing status||Standard deduction|
|Married filing jointly||$27,700|
|Married filing separately||$13,850|
|Head of household||$20,800|
Being blind or age 65 or over—or having a spouse who falls into one of those categories—can raise your standard deduction by the amounts below.
|Filing status||Extra amount added to standard deduction|
|Single or head of household: Blind or 65 or older||$1,850|
|Single or head of household: Blind and 65 or older||$3,700|
|Married filing jointly or separately: Blind or 65 or older||$1,500 (per person who falls into one category)|
|Married filing jointly or separately: Blind and 65 or older||$3,000 (per person who falls into both categories)|
If you’re unsure of which filing category you fall into, this quick IRS tutorial could help you figure out your status.
How does the standard deduction work?
The standard deduction reduces your taxable income by a certain amount that the IRS sets each year for each filing status. This potentially lowers the amount you owe in taxes. You just have to indicate on your tax return that you’re taking the standard deduction. Taking the standard deduction means you don’t have to collect and retain records of deductible expenses, such as mortgage interest, charitable donations, and home office supplies, but you still can reduce your tax bill.
What could taking the standard deduction look like? If a hypothetical couple with an adjusted gross income (AGI) of $127,700 takes the married filing jointly 2023 standard deduction of $27,700, their taxable income would be reduced to $100,000. So they’re taxed as though they earned $100,000 in 2023 and would owe less in taxes than if they were taxed on their full $127,700 income. If one partner is blind or 65 or older, their income would be reduced further to $98,500. And if one partner is both blind and 65 or older, they would instead be taxed on $97,000.
Standard deduction vs. itemized deductions
Now that you understand what a standard deduction is, let’s look at another option: itemizing your deductions. When you itemize, you’re looking to see if you’ve spent money on a long list of eligible expenses that you may claim as deductions. Some of the common ones include home mortgage interest on up to $750,000 in principal, up to $10,000 of state and local taxes, medical and dental expenses that exceed 7.5% of your AGI, and eligible charitable donations.2 Keep in mind that you might not be able to deduct everything you’ve paid out during the tax year. For example, you may only deduct up to $10,000 in state and local taxes for 2023, even if you spent more.
A key difference between a standard deduction vs. itemized deductions: While the standard deduction is a preset amount based on your filing status, your itemized deductions are not preset by the IRS. It’s possible they could add up to more than the standard deduction you’re entitled to take.
When does it make sense to take the standard deduction vs. itemize?
First, there are a few situations when you can’t use the standard deduction, which means you must itemize. One of the more common restrictions: If you’re married filing separately and your spouse chooses to itemize, then you must also itemize, even if taking the standard deduction would lower your taxable income more. If you’re unsure whether you may take the standard deduction, consult with a tax professional.
If you’re eligible to take the standard deduction, it could be a good idea to talk to a tax pro about whether you should take it. The IRS suggests doing some math to decide if it makes sense to claim it.
- Add up the value of your possible itemizable deductions. The IRS provides a worksheet, Schedule A, for this calculation.
- If your itemized deductions are less than the standard deduction, taking the standard deduction instead makes more sense—it’ll lower your taxable income more.
- If your itemized deductions are more than the standard deduction, your taxable income would be lower if you itemize.
Since your income and itemizable deductions might change each year, it’s worth it to run the numbers every tax season. If you take the standard deduction one year, you can itemize another year if that makes more sense. Same for if you itemize this year—you can take the standard deduction in the future.
How to claim the standard deduction
Claiming the standard deduction is simple. If you prepare your tax return on paper, use Form 1040 to calculate your taxable income. Usually on line 12 of the form, you have the option to write in either the standard deduction amount for your filing status or the sum of your itemized deductions. If you’re using the standard deduction, just write in the value of the deduction based on the tax year, your filing status, and whether you qualify for any additions because of your or your spouse’s age or blindness.
If you prepare your return using tax software or the IRS’s Free File, check a box and select the standard deduction. If a tax preparer files your taxes, let them know you’d like to take the standard deduction and they’ll handle this calculation for you. Don’t be surprised if they ask you about potential itemized deductions. It’s part of their job to help you avoid common tax pitfalls, such as taking the standard deduction when itemizing could lower your tax bill more.
After you file using the standard deduction, you won’t need any backup receipts. If you itemize, however, keep your proof of payments in case of an IRS audit. The IRS suggests taxpayers hold on to their receipts for 3 to 7 years, depending on their situation.