Standard Deduction

Category: tax

A fixed dollar amount that reduces the amount of income on which an individual is taxed.

Most taxpayers take the standard deduction, which is a "no-questions-asked" tax write-off set annually by the IRS. If your total itemized expenses (like mortgage interest and charity) are less than the standard deduction, you simply take the standard amount to simplify your filing.

Common Examples

• By taking the standard deduction, the taxpayer avoided the complex documentation required for itemizing specific personal expenses.
• The standard deduction is adjusted annually for inflation to ensure it maintains its relative value for the average filer.