Luckily, Uncle Sam allows you to reduce your tax burden by lowering your tax liability with deductions. This can ensure you’re not paying more in taxes than you should. It also means that if you’ve had more withheld than you owe, you’ll get the tax refund you’re entitled to receive.
The Internal Revenue Service offers taxpayers two options for reducing their taxable income: itemizing deductions or taking something called the standard deduction.
The standard deduction is a dollar amount you can use to lower your taxable income and it doesn’t require you to keep track of every expense throughout the year.
So let’s take a look at what the 2022 and 2023 standard deduction amounts are, why they’ve changed since last year, and how to determine whether you should take the standard deduction or itemize your deductions.
What are the standard tax deductions for 2022 and 2023?
|Tax filing status
|2022 standard deduction
|2023 standard deduction
|Head of household
|Married, filing separately
|Married, filing jointly
Right off the bat, you may have noticed in this chart that the standard deduction changes from one year to the next. In general, the amount you can deduct on your federal tax return is adjusted each year for inflation.
The standard deduction you can claim when you file taxes also varies depending on your filing status, whether you’re 65 or older and/or blind, and whether someone else can claim you as a dependent.
You’re allowed an additional deduction to what’s shown in the chart if you’re age 65 or older at the end of the tax year ($1,500-$1,850 depending on filing status) and an additional deduction for blindness ($1,500-$1,850 depending on filing status).
To qualify for an additional standard deduction for blindness, you need only be blind on the last day of the tax year (certifiable by your physician).
If, however, another taxpayer can claim you as a dependent, the amount of your standard deduction may be reduced. This is because the taxpayer claiming you as a dependent already receives a tax deduction on your behalf.
If you were another person’s dependent during the tax year, your standard deduction will generally be limited to the greater of $1,400 or your earned income plus $400. To be claimed as another taxpayer’s dependent, you must either be a qualifying child or a qualifying relative of that taxpayer.
How does the standard deduction work?
The standard deduction is a flat amount the tax system lets you subtract to reduce your taxable income. This ensures every taxpayer has at least some portion of their income that is not subject to federal income tax.
Not all taxpayers, however, are eligible to take the standard deduction. According to the IRS website, taxpayers in the following situations can’t use the standard deduction:
- If you’re a married couple filing as “married filing separately” and your spouse itemizes deductions
- If you were a nonresident alien or dual-status alien during the year (exceptions apply)
- If you file a tax return for a time period of less than 12 months due to a change in your annual accounting period (calendar year)
- If you’re filing on behalf of an estate or trust, common trust fund, or partnership
While you have the option of claiming the standard deduction or itemizing your deductions, you can’t claim both in the same year.
It’s often much simpler to go with the standard deduction rather than itemize, as breaking down your deductions requires more forms to be completed and for you to have the proper documentation for all the deductions you’re claiming.
This can include receipts and bookkeeping records that prove you paid the itemized expenses during the year for which you’re filing and that the expenses were deductible.
Itemized deductions can include amounts you paid for state taxes, local taxes, sales tax, student loan interest, mortgage interest and property taxes on your home, charitable donations, medical expenses and dental expenses that exceed 7.5% of your adjusted gross income, and disaster losses from a federally declared disaster.
Other qualified expenses can include work-related education expenses, business travel expenses, and your vehicle and home office if used for business.
Deductions that were taken away through the tax reforms of the Tax Cuts and Jobs Act (TCJA) of 2017 include unreimbursed job-related expenses such as uniforms and union dues as well as interest paid on most home equity loans.
But even though taking the standard deduction is simpler, it could actually cost you money depending on your situation. If the total of your deductible expenses would come out to be more than the standard deduction, it would be worth the effort to itemize or pay someone to do it for you.
You might benefit from itemizing and end up with a lower tax bill, for instance, if you had large uninsured medical and dental expenses that are greater than your standard deduction.
TipAs of January 1, 2022, you can no longer claim a charitable contribution if you use the standard deduction.
Should I take the standard deduction?
You should take the time to run the numbers to see which gives you the bigger deduction — itemizing your deductions or taking the standard deduction.
If itemizing reduces your taxable income more than taking the standard deduction, you’re probably better off claiming itemized deductions.
The process usually takes more time and requires more forms, but if you have the proof you’re entitled to the deductions, itemizing could save you money.
The Tax Cuts and Jobs Act significantly increased the standard deduction, so you might find that the standard deduction is a better option even if you’ve itemized in the past.
Following this change in the tax law, the standard deduction increased from $6,350 to $12,550 for individual filers, from $12,700 to $25,100 for joint returns, and from $9,350 to $18,800 for heads of household for the tax year 2021.
This increase in the standard deduction has led to a significant decrease in the percentage of taxpayers who itemize their deductions, according to the independent tax policy nonprofit Tax Foundation.
Based on estimates for 2019, the percentage of taxpayers who will choose to itemize their deductions is nearly 17% lower than it would have been under pre-TCJA law.
Ultimately, whether or not you should take the standard deduction depends on your personal tax situation and how the numbers turn out when you compare the two deduction options. Whichever results in a bigger amount is likely the way to go.
Here's how you can compare all the numbers:
- You can ask your tax preparer or CPA to run the numbers for you
- You can use TurboTax or TaxAct (some of the best tax software) to help determine what is best for you.
- Even free tax software could help you analyze whether you’re better off itemizing your deductions or taking the standard deduction.
- You can also use the IRS standard deduction interview tool to make this determination as well.
FAQs about the standard deduction
Who is not eligible for standard deduction?
Not everyone is eligible for the standard deduction. First, if you decide to itemize, you can’t claim the standard deduction. If you’re married filing separately and your spouse itemizes deductions, you can’t claim a standard deduction.
Additionally, nonresidents or dual status aliens can’t get a standard deduction, except in certain circumstances. Finally, the standard deduction isn’t open to those who file as estates, trusts, or partnerships.
What deductions can I claim in addition to standard deduction?
There are some deductions you can take in addition to the standard deduction if you meet certain circumstances, such as being at least 65 or if you are experiencing blindness. It’s also possible to increase your standard deduction if you’ve experienced a qualified disaster and had losses as a result.
Can you deduct property taxes if you take standard deduction?
No, if you deduct property taxes, you can’t claim the standard deduction, as the property tax deduction is itemized on Schedule A.
What is the difference between a tax credit and a tax deduction?
A tax deduction reduces your taxable income. It’s something that acts to reduce your income so you’re taxed on a lower amount. A tax credit, on the other hand, acts as a direct way to reduce your tax bill. A tax credit is similar to having a gift card you can apply to your tax bill to reduce what you owe.
As you begin preparations for filling out tax forms and filing your income tax return, this information should give you a better idea of the standard deductions for 2022 and 2023, which will help you understand how to manage money wisely.
Regardless of how you file your taxes this year — whether you pay a tax preparer, use tax prep software, or file for free — it’s a good idea to know which approach to deductions will provide the best tax benefit for you.
While the TCJA increased the standard deduction, you’ll still want to compare it with the tax break you could receive by itemizing. This will help ensure you’re avoiding any costly tax mistakes and getting the deductions you’re entitled to receive.
And if you find any of this overwhelming or feel that you have a unique situation, you might consider seeking out the help of a tax professional.