Standard Deduction
A fixed dollar amount that reduces taxable income.
The standard deduction is a flat dollar amount that reduces your taxable income, available to taxpayers who don't itemize. For 2024, it is $14,600 for single filers, $29,200 for married filing jointly, and $21,900 for heads of household. The amount is adjusted annually for inflation. Most taxpayers take the standard deduction because it exceeds their total itemizable expenses.
Example
A single freelancer with $60,000 in AGI takes the $14,600 standard deduction, reducing taxable income to $45,400.
Why It Matters for Your Business
The standard deduction is an automatic tax reduction that simplifies filing—about 90% of taxpayers now use it instead of itemizing after the 2017 tax reform.
Related Terms
More Taxes Terms
Adjusted Gross Income
Gross income minus specific deductions like retirement contributions.
Tax Audit
An examination of tax returns by the IRS to verify accuracy.
Capital Gains
Profit from selling an asset for more than its purchase price.
Capital Loss
Loss from selling an asset for less than its purchase price.
Tax Deduction
An expense that reduces taxable income.
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