What is Standard Deduction?
Definition The standard deduction is a flat dollar amount that reduces taxable income, with the amount set each year based on filing status and adjusted for inflation. Taxpayers choose the larger of the standard deduction or their total itemized deductions. Since it was roughly doubled in 2018, the large majority of filers now take the standard deduction.
Knowing when a client is better off itemizing versus taking the standard deduction is a foundational annual planning decision.