Definition
The standard deduction is a fixed amount you can subtract from AGI without itemizing.
How It Works
The amount depends on filing status and adjusts annually for inflation. Taxpayers choose the larger of the standard deduction or their total itemized deductions.
Example
A married couple with few itemizable expenses takes the standard deduction because it exceeds what they could itemize.
Who It Applies To
Any taxpayer not itemizing.
Watch-Outs
High earners with significant mortgage interest, state taxes, or charitable giving may do better itemizing, especially when using strategies like charitable bunching.
