How to Use the Standard Tax Deduction

Most taxpayers use the standard deduction to reduce their taxable incomes

Standard income tax deductions for tax year 2019

Image by Maddy Price © The Balance 2020

It costs money to live, and the IRS gets that. The tax code is set up to allow taxpayers to effectively put some of their incomes aside tax-free to help meet our living expenses. It offers taxpayers two options for subtracting from their taxable incomes. They can claim the standard deduction or they can itemize deductions. 

Claiming the standard deduction is infinitely easier, just a matter of checking a box on your tax return, and many taxpayers find that it amounts to more than all their itemized deductions combined, especially after the 2018 federal tax overhaul.

Claiming the Standard Deduction vs. Itemizing

Taxpayers can deduct the amount of the tax year's standard deduction on their tax returns, or they can add up everything they spent on tax-deductible expenses over the course of the year, such as medical expenses and charitable giving, then subtract that total from their incomes instead.

"Instead" is the pivotal word here. It's an either/or decision, so you'll want to choose the option that will reduce your taxable income—and, by extension, your tax liability—the most. This works out to determining which number is greater, the standard deduction available to you for your filing status or the total of all your itemized deductions. 

Your filing status is determined by factors such as your marital status and whether you have dependents. The IRS offers five of them with different qualifying rules, standard deductions, tax rates, and credit and deduction eligibility.

According to the IRS, 68.6% of all taxpayers choose the standard deduction in 2018. 

How Much Is the Standard Deduction?

The standard deduction you qualify for depends on your filing status, your age, and whether you're blind. The number is adjusted each year to keep pace with inflation, and the Tax Cuts and Jobs Act (TCJA) increased it significantly, virtually doubling it for each filing status, in 2018.

The IRS offers an interactive tool to figure out how much you're entitled to if you're not sure of your filing status. It takes about 15 minutes to complete.

These are the standard deduction amounts for 2019, the tax return you'll file in 2020:

Standard Deduction Amounts for the 2019 Tax Year 

Filing Status Deduction Amount
Single $12,200
Head of Household $18,350
Married Filing Jointly $24,400
Married Filing Separately $12,200
Qualifying Widow(er) $24,400

The Standard Deduction Based on Age or Blindness

Taxpayers who are age 65 and older and individuals who are legally blind receive an additional standard deduction. It's calculated by adding the taxpayer's standard deduction based on their filing status, plus an additional amount.

The additional amount for people who are blind or 65 and older is $1,300 each for married taxpayers, or $1,600 for unmarried taxpayers and head-of-household filers as of the 2019 tax year. It increases to $1,650 for unmarried taxpayers and heads of household in 2020.

According to IRS rules, you reach age 65 on the day before your 65th birthday.

Special Rule for Married Couples Filing Separate Returns

You and your spouse must both take the standard deduction or you must both itemize your deductions if you're married but filing separate returns. You can't mix-and-match with one spouse itemizing and the other taking the standard deduction. 

It usually makes sense to figure your taxes both ways with each spouse itemizing and each spouse taking the standard deduction to find out which yields the best overall tax savings for you. 

The Standard Deduction for Dependents

Taxpayers who can be claimed as dependents on someone else's tax return have variable standard deduction amounts. As of the 2019 tax year, your standard deduction is limited to either $1,100 or your earned income plus $350, whichever is more. In either case, the deduction is capped at the amount of the standard deduction for your filing status—it can't be more. 

It doesn't matter if someone else actually did claim you. The pivotal point is that they could have if they had wanted to.

The Effect of the TCJA on Standard Deductions

The TCJA more or less doubled the standard deduction in 2018, but only through tax year 2025. It simultaneously took away and modified some itemized deductions. This might make the standard deduction a more preferable choice than itemizing for many taxpayers, because a few changes are somewhat significant.

The SALT Deduction: State and Local Taxes

You can still claim an itemized deduction for state and local taxes that you pay if you itemize, but the TCJA caps them at $10,000. There was no limit before the 2018 legislation.

For example, it used to be that if you paid $6,000 in income tax to your state and $6,000 in property taxes for your home, you got a $12,000 itemized SALT deduction. Not anymore. You'll have to leave $2,000 of that money on the table, the $2,000 that surpasses the $10,000 limit.

The Home Mortgage Interest Deduction

The deduction for home mortgage interest is still available as well, but this has been tweaked, too. It used to apply to mortgages of up to $1 million on first and second residences. That's been reduced to mortgages totaling $750,000.

You could also deduct the interest on home equity loans through 2018, but that provision has been restricted. Under the TCJA, you can only claim home equity interest if you use the money to "buy, build, or substantially improve your home."

The Casualty and Theft Loss Deduction

There's no longer a deduction for stolen property, and losses are limited to those that occur within federally declared disaster areas. 

Miscellaneous Deductions

Miscellaneous deductions for unreimbursed employee business expenses have been eliminated, at least for most workers. Some exceptions apply.

All this will make it more difficult to surpass $24,200 in itemized deductions in the 2019 tax year if you're married and filing a joint return. You might want to prepare your return both ways—particularly if you think you have a lot of itemized deductions—to make sure that you're getting the greatest deduction possible. Every dollar counts. 

These changes went into effect when 2018 tax returns were filed in April 2019. The TCJA is set to sunset or expire at the end of 2025 unless Congress renews it, so these terms might not be around forever. 

Article Sources

  1. The Tax Policy Center. "What Are Itemized Deductions and Who Claims Them?" Accessed Feb. 19, 2020.

  2. IRS. "SOI Tax Stats — Tax Stats-at-a-Glance." Accessed Feb. 19, 2020.

  3. IRS. "Standard Deduction." Accessed Feb. 19, 2020.

  4. IRS. "Publication 501 (2019), Dependents, Standard Deduction, and Filing Information." Accessed Feb. 19, 2020.

  5. IRS. "Topic No. 503 Deductible Taxes." Accessed Feb. 19, 2020.

  6. IRS. "Publication 936 Home Mortgage Interest Deduction." Page 1. Accessed Feb. 19, 2020.

  7. IRS. "Topic No. 515 Casualty, Disaster, and Theft Losses." Accessed Feb. 19, 2020.

  8. IRS. "Publication 529 (12/2019), Miscellaneous Deductions." Accessed Feb. 19, 2020.