standard deduction

Standard Deduction

A base amount of income not subject to tax. This base amount can be used to reduce a taxpayer's adjusted gross income (AGI) if he/she does not choose the itemized deduction method of calculating taxable income. The amount of the standard deduction is based on a taxpayer's filing status, age and whether he or she is blind or claimed as a dependent on someone else's tax return.

Notes:

The biggest reason taxpayers use standard instead of itemized deductions is that taxpayers don't have to keep track of every possible tax-deductible expense throughout the year. Plus, many people find the standard deduction amount to be fairly generous and usually greater than the total they could reach if they added up all of their tax-related expenses separately. Also, the standard amounts are adjusted for inflation each year.

See also: Adjusted Gross Income - AGI, Dependent, Income Tax, Inflation, Itemized Deduction

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Standard deduction

The IRS-specified amount by which a taxpayer is entitled to reduce income an alternative to itemizing deductions.

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standard deduction

The minimum deduction from income allowed a taxpayer for calculating taxable income. Individuals with few itemized deductions elect the standard deduction in place of itemizing deductions. Formerly called zero bracket amount.