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Standard Deduction
Definition
A fixed amount of income that is exempt from federal income tax.
Explanation
The standard deduction is an amount the IRS allows you to subtract from gross income before calculating taxes. Amount varies by filing status ($14,600 for single filers in 2024). You either take the standard deduction OR itemize deductions, whichever is larger.
Most taxpayers take the standard deduction because it's simpler and often larger than itemized deductions.
Example
Single filer with $50,000 income and $14,600 standard deduction pays tax on only $35,400 of taxable income.