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Standard deductions grew substantially in 2018, but they’re only increasing slightly for the 2019 tax year.
The standard deduction is a specific dollar amount by which you’re allowed to reduce your taxable income — which in turn could lower your tax obligation. If you’re not eligible to take the standard deduction, or you think you have allowable deductions that will total more than your standard deduction amount, you could choose to itemize deductions instead.
Historically, most filers take the standard deduction.
Let’s take a look at what the new standard deduction amounts are, why they’ve changed, and factors to consider when deciding whether to take the standard deduction or itemize your deductions on your 2019 federal income tax return (due in 2020).
- 2019 standard deduction amounts
- Why do standard deduction amounts change?
- Advantages and disadvantages of the standard deduction
- Which is best? Standard deduction or itemizing?
Here are the new standard deduction amounts for 2019.
|Filing status||2019 standard deduction||Increase from 2018|
|Married filing jointly||$24,400||$400|
|Married filing separately||$12,200||$200|
|Head of household||$18,350||$350|
Usually, the IRS allows additional standard deduction amounts for taxpayers who are blind or age 65 or older. Your standard deduction amount may also be much lower if someone else claims you as a dependent on their return — your parents, for example, if you’re still a college student.
It’s important to note that if you opt to claim the standard deduction, you’ll use the numbers in the above chart when you file your 2019 tax return in 2020. If you’re still working on your 2018 tax return (if you got a filing extension for Oct. 15 instead of April 15), you’ll still use the slightly lower 2018 standard deduction amounts, not the 2019 numbers.Tax deduction vs. tax credit: What’s the difference?
Every year, the IRS revises many tax-related amounts in order to account for inflation. This year’s revisions included the standard deduction. Other things the IRS also revised for 2019 in order to account for inflation include the following:
- The alternative minimum tax exemption amount increased by $1,400 for single filers, and the income level at which the exemption begins to phase out has also increased — to $510,300 for single filers
- The health flexible spending arrangement contribution limit increased by $50
- The foreign earned income exclusion increased $2,000
- Upper thresholds for each tax bracket have increased, though the tax rates remain the same
- The maximum earned income tax credit for low-income taxpayers has increased to $6,557 for joint filers with three or more qualifying children
As a way to reduce your taxable income, the standard deduction has a lot going for it.
- It’s a lot more than it used to be. Prior to tax reform, you probably would have had to itemize your deductions to reduce your taxable income by $12,200 (for single filers) or $24,400 (for married couples filing jointly).
- It’s usually easier. Itemizing requires you to complete additional tax forms as well as have documentation for many of the deductions you would itemize. Subtracting the standard deduction from your taxable income is a straightforward way to reduce the amount of income you pay tax on.
On the flip side, depending on your situation, you may qualify for certain other deductions that you normally can’t claim if you take the standard deduction. For example, if you itemize your deductions, you may be able to take the deductions below.
- State and local tax, or SALT, deduction
- Mortgage interest deduction
- Charitable contributions deduction
- Deduction for dental and medical expenses
It’s important to note that deductions generally have limitations on how much you can deduct. But if all your expenses that are eligible for deduction add up to more than the standard deduction amount for your filing status, you may be able to lower your tax obligation more by itemizing.
Each person’s tax situation is unique, and the best way to decide if the standard deduction or itemizing is better for you might be to run the numbers both ways. Online tax preparation and filing services can help you crunch the numbers. For example, Credit Karma Tax® allows users to easily see the difference between the two options.
Because the standard deduction has increased so much now, many more people may find the standard deduction works best for them. Still, if you’re on the fence and think your deduction expenses may add up to more than your standard deduction, it may be worth doing the math to see if you’ll get a lower federal tax bill by itemizing.
Now that the standard deduction has been raised (and raised again, with the 2019 inflation adjustments), there’s even more incentive to take the simple route for reducing your taxable income. But remember to do the math. Just because something is simpler doesn’t necessarily mean it will help you save money.