Taxes are all about numbers, but generally speaking, we taxpayers are not big math fans. That's why we hire tax professionals or use tax software.
That aversion to doing more calculations is why most of us have chosen, year-in and year-out, to claim the standard deduction. Sure, I know, we should use the tax deduction method, either standard or itemizing, that gives up the better tax due result.
Still, I know some folks who use the standard deduction method without even comparing because, as noted, it's easier. There are no receipts to save, no additional adding, subtracting, and figuring percentages. That's more appealing to them than saving some tax dollars. Whatever works for you.
Even better, the Internal Revenue Service provides the standard amount you can claim, based on your filing status, right there at the bottom of the first page of Form 1040. That's the 2022 tax year 1040 shown below. The IRS hasn't finalized the 2023 form yet.
The IRS also is fine with around 90 percent of taxpayers claiming the standard deduction. It means less work for the agency.
Increased standard deductions: The standard deduction train picked up even more passengers after the Tax Cuts and Jobs Act (TCJA) of 2017 essentially doubled the standard amounts. The larger deductions are in effect through 2025.
One thing, though, that the tax reform law didn't change was the annual inflation adjustment of the deduction amounts.
The IRS announced those many and assorted tax-related amount changes last week, including today's Part 2 of the ol' blog's annual 10-part inflation series that looks at deductions (and more).
For filers who claim the standard deduction in tax year 2024, those amounts for most taxpayers younger than 65 are:
standard deduction for married couples filing jointly for tax year 2024 rises to $29,200, an increase of $1,500 from tax year 2023. For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, an increase of $750 from 2023; and for heads of households, the standard deduction will be $21,900 for tax year 2024, an increase of $1,100 from the amount for tax year 2023.
- $14,600 for single taxpayers and married taxpayers filing separate returns, $750 more than this year;
- $21,900 for heads of household, a bump of $1,100 from tax year 2023; and
- $29,200 for married filing jointly couples and surviving spouses, $1,500 more than this year.
At the risk of being repetitive (and because I like tables), below is a comparison of this year's 2023 deduction amounts and those that will be available in 2024. Again, note the dates, i.e., tax years, to which these amounts apply.
Head of Household
Married Filing Jointly
Qualifying Widow or Widower (Surviving Spouse)
Married Filing Separately
Age adds to deductions: I know my tax-savvy readers caught my earlier reference to "most taxpayers younger than 65" when it comes to standard deduction amounts.
The age distinction is important because the tax code allows older filers and those who are visually impaired to claim additional standard deduction amounts. And you can do so simply by ticking a checkbox on your tax return.
Each added standard deduction amount option is separate for each filer, meaning that an older married couple could check up to four boxes on their joint return. The total number of boxes checked then is used to determine the filer(s) standard deduction amount.
For the 2024 tax year, filers age 65 or older and/or legally blind taxpayers get an additional standard deduction amount. It will be $1,550 for each qualifying circumstance. That's $50 more than the $1,500 allowed on 2023 returns.
The additional standard deduction amount in age/vision situations is increased next year to $1,950 if the taxpayer also is unmarried and not a surviving spouse. That's $100 more than 2023's $1,850 addition.
And if you're a tax filer who also can be claimed as a dependent on another filer's tax return, in 2024 your standard deduction amount cannot be more than the greater of either $1,300 or the sum of $450 and the dependent filer's earned income. On 2023 returns, a dependent's standard deduction amount cannot be more than the greater of either $1,250 or the sum of $400 plus your earned income.
Itemized deduction issues: A key component of annual tax planning is determining whether you'd be better off claiming the standard deduction or itemizing all your allowable tax expenses on Schedule A.
The TCJA changes made the standard deduction choice a no-brainer for tens of thousands or filers. But not all.
And don't just assume that taking the standard route is the best tax deduction map to follow. You know that old tax saying: Assuming can get your a$$ kicked by the IRS in the form of a higher tax bill.
OK, maybe that's just my personal old tax saying, but you get the idea. Double check your deduction choice so that you don't cheat yourself at filing time.
Basically, and even the IRS says this, you always want to use the deduction method that gives you the larger amount to offset your income. (Take note, my lazy filing friends mentioned earlier who always go for the standard deduction.)
Even better, you're not locked into any one way. It's a decision you make each tax year. One year, itemizing might be better. The next year, it's wise to take the standard deduction.
Knowing what's available on the standard side gives you a baseline to use in measuring your potential itemized expenses.
For some folks, even under the new tax law, their total itemized deduction amount will still be more than their standard deduction amount. In these cases, by all means itemize.
Exemptions, sorta, still around: The personal exemptions, a once-popular tax reduction option that was eliminated by the TCJA through 2025, still is off the tax books.
Exemptions were a specific dollar amount, adjusted annually for inflation, that taxpayers could claim for themselves, their spouses if filing jointly and dependents. The total exemptions helped reduce the amount of filers' income subject to tax.
TCJA supporters say the exemption elimination isn't a big deal, although some filers with larger families disagree. The exemption loss is offset, they argue, by the previously discussed larger standard deduction amounts, as well as tax reform's larger child tax credit and the credit for other, non-child dependents.
Sometimes, though, tax laws use the personal exemption amount to calculate whether a filer can claim another tax benefit and/or how much of such a tax break. Doing away with the personal exemption amount would effectively invalidate those tax laws.
But that wasn't the intent of the TCJA's exemption erasure. So the IRS continues to calculate the now officially zero exemption amount based on pre-2017 exemption data.
A common situation where the exemption amount matters is when a taxpayer wants to claim a tax break for a qualifying relative. For the 2023 tax year, the IRS' so-called deemed exemption amount, based on a gross income limitation, is $5,050. That's $350 more than the $4,700 exemption in 2023.
More inflation info on the way: Well, this second part of the annual inflation series has turned into a numbers-heavy post for a tax deduction that's supposed to be simple and easy. But ain't that the way so often when it comes to taxes?
And speaking of numbers, the continuation of the annual 10-part tax inflation series earns that still-in-the-works collection this week's By the Numbers honor.
I'll give you some time to sort through these deduction amounts, both this year's and those for 2024. Then in the coming days, I'll continue breaking down more 2024 inflation adjustments.
As the box below indicates, you can find a directory to all 10 parts in the first post of the series. Thanks for reading this one and all the rest.
And thanks especially for your tax inflation interest and explanation patience!
|This post on inflation's effects on 2024 standard deductions (and more)
is Part 2 of the ol' blog's annual series on myriad tax-related inflation adjustments.
The 10-part series started with a look at next year's
income tax brackets and rates.
At the end of that first item there is a directory
of all of the 2024 tax-related inflation changes.
Note: The 2024 figures in this post apply to that tax year's return to be filed in 2025.
For comparison purposes, you'll also find 2023 amounts that apply
to this year's 2023 tax returns that will be due April 15, 2024.
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