The IRS Has Supersized Standard Deductions For 2023. Is That Good For Your Taxes?

Each year when you fill out your federal income tax return, you can either take the standard deduction or itemize deductions. Few people find it worthwhile to itemize anymore, because standard deduction amounts were bulked up by a major tax overhaul in 2017. Now, the IRS has made standard deductions even bigger, to account for the highest inflation in decades.

How much will the standard deduction be worth on 2022 and 2023 tax returns? That depends on your filing status, age, whether you are blind and whether another taxpayer can claim you as a dependent.

What Is the Standard Deduction for 2022 and 2023?

The IRS has released the tax brackets and standard deduction amounts for the 2023 tax year, meaning the return you’ll file in 2024. Here are the standard deduction amounts for both 2022 and 2023 available to most taxpayers.

How Does the Standard Deduction Work?

The standard deduction is the simplest way to reduce your taxable income on your tax return. Rather than tracking actual expenses, saving receipts and filling out additional tax forms, you simply claim a flat dollar amount determined by the IRS.

There’s a wide range of expenses you can claim as itemized deductions, including out-of-pocket medical expenses, state and local taxes, home mortgage interest and charitable contributions.

To itemize write-offs, you must keep receipts or other documentation proving you spent the money.

Itemizing or claiming the standard deduction reduces your taxable income. For example, if you file as a single taxpayer and earn $75,000 in 2022, taking the standard deduction of $12,950 will reduce your taxable income to $62,050.

Generally, the standard deduction is available to anyone who doesn’t itemize, although there are a few exceptions. You cannot claim the standard deduction if:

• You are married and file separately from a spouse who itemizes deductions
• You were a nonresident alien or dual-status alien during the tax year
• You file a return for less than 12 months due to a change in your accounting period
• You file as an estate or trust, common trust fund, or partnership

Can Itemizing Save You Money?

For some people, itemizing reduces their tax bill more than claiming the standard deduction would. However, an estimated 90% of taxpayers choose to claim the standard deduction.

This wasn’t always the case. Before then-President Donald Trump signed the 2017 tax law, roughly 30% of taxpayers itemized deductions. But the law temporarily increased the standard deduction—nearly doubling it for all filing statuses. It also eliminated or restricted several itemized deductions, including:

• Capping the deduction for state and local taxes (SALT) at $10,000
• Limiting the home mortgage interest deduction to interest paid on up to $750,000 of mortgage debt (up to $375,000 if married filing separately)
• Eliminating unreimbursed employee expenses

As a result, fewer people benefit from itemizing—a situation that’s likely to remain until those provisions of the 2017 tax overhaul expire on December 31, 2025, or Congress makes changes sooner.

What Is the Additional Standard Deduction?

Taxpayers who are age 65 or older or blind can claim an additional standard deduction, an amount that’s added to the regular standard deduction for their filing status.

Navigating the additional standard deduction amounts can be confusing. IRS preliminary instructions for the 2022 tax year Form 1040 include a table to help you calculate the standard deduction available to you based on when you (and your spouse, if applicable) were born and whether you and your spouse are considered legally blind.

Let’s run through a couple of examples of how the additional standard deduction can work.

Example 1: Jim and Susan are a married couple who file a joint return. They are both over age 65. Susan is blind; Jim is not.

For 2022, they’ll get the regular standard deduction of $25,900 for a married couple filing jointly. They also both get an additional standard deduction amount of $1,400 per person for being over 65. They get one more $1,400 standard deduction because Susan is blind. As a result, their 2022 standard deduction is $30,100: $25,900 + $1,400 + $1,400 + $1,400.

On their 2023 return, assuming there are no changes to their marital or vision status, Jim and Susan’s standard deduction would be $32,200. That’s the 2023 regular standard deduction of $27,700 for married taxpayers filing joint returns, plus three additional standard deductions at $1,500 apiece.

Example 2: Ellen is single, over the age of 65, and not blind. For 2022, she’ll get the regular standard deduction of $12,950, plus one additional standard deduction of $1,750 for being a single filer over age 65. Her total standard deduction amount will be $14,700.

For 2023, assuming no changes, Ellen’s standard deduction would be $15,700: the usual 2023 standard deduction of $13,850 available to single filers, plus one additional standard deduction of $1,850 for those over 65.

IRS Definition of Blindness

To claim an additional standard deduction for blindness, you (or your spouse, if applicable) must be either totally blind by the end of the tax year or get a statement certified by our ophthalmologist or optometrist stating that either:

• You can’t see better than 20/200 in your better eye with glasses or contact lenses
• Your field of vision is 20 degrees or less

Standard Deduction for Dependents

If another taxpayer can claim you as a dependent, your standard deduction is limited. For 2022, the standard deduction for dependents is limited to the greater of $1,150 or your earned income plus $400—but the total can’t be more than the normal standard deduction available for your filing status.

For 2023, the limit will be $1,250 or your earned income plus $400, whichever is greater. But again, the amount can never be greater than the usual standard deduction available for your filing status.

For example, say Sarah is a college student who is a dependent of her parents and earns $15,000 from a part-time job in 2022. When she files her 2022 tax return, Sarah’s standard deduction will be the greater of:

• $1,150
• $15,400 (her $15,000 of earned income plus $400)

The obvious greater amount there is $15,400. However, since her standard deduction can’t be larger than the normal standard deductible available for her filing status—in this case, single—her standard deduction for 2022 would be $12,950.

Now, let’s say in 2023, Sarah works less, so her earned income will be only $10,000. Her standard deduction would be the greater of:

• $1,250
• $10,400 (her $10,000 of earned income plus $400)

Sarah’s standard deduction for 2023 would be $10,400 since it’s less than the normal standard deduction available for her filing status ($13,850 in 2023).

Claiming the standard deduction is usually the easier way to do your taxes, but if you have a lot of itemized deductions, add them up and compare them to the standard deduction for your filing status. Most of the best tax filing software will help you do this. If you have enough deductions, itemizing might be the more beneficial route during the upcoming tax season.