Standard Deduction

The standard deduction is an amount that taxpayers can subtract from their taxable income. It is a dollar amount that is set by the IRS each year. The standard deduction is available to all taxpayers, regardless of their filing status or income.

The standard deduction is used to reduce the amount of income that is subject to tax. This can result in a lower tax bill. The standard deduction is also used to calculate the amount of the earned income tax credit (EITC).

The amount of the standard deduction depends on the taxpayer's filing status. For single taxpayers, the standard deduction is $12,550 in 2023. For married taxpayers filing jointly, the standard deduction is $25,100. For heads of households, the standard deduction is $18,800. For married taxpayers filing separately, the standard deduction is $12,550.

Taxpayers who are married filing jointly can choose to "itemize" their deductions instead of taking the standard deduction. Itemizing means that the taxpayer can deduct the actual amount of their qualifying expenses, such as medical expenses, mortgage interest, and charitable contributions. However, most taxpayers find that it is more beneficial to take the standard deduction.

The standard deduction is an important part of the tax system. It helps to ensure that all taxpayers have a basic level of tax relief. The standard deduction also helps to simplify the tax filing process.