What's the 2023 Standard Deduction?

Taking the standard deduction or claiming itemized deductions is a key choice you have each year when filing your federal income tax return. And you always want to pick whichever one helps you the most. For about 90% of all taxpayers, taking the standard deduction is the way to go. 

However, the IRS says, "You should itemize deductions if your allowable itemized deductions are greater than your standard deduction or if you must itemize deductions because you can't use the standard deduction."

But you can't know for sure which route is better for you unless you know how much your standard deduction is for the tax year.

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Standard Deduction: How Much is it for 2023?

So how much is the standard deduction? The standard deduction amount depends on your filing status, whether you're 65 or older and/or blind, and whether another taxpayer can claim you as a dependent on their tax return. The standard deduction amount is also adjusted annually for inflation, so your 2023 standard deduction is larger than it was for 2022.

There are also some special rules that apply if you are claiming the standard deduction.

• For instance, if you recently had a "net qualified disaster loss," your standard deduction may be higher (see below).
• If you're married but filing separate tax returns, you can't take the standard deduction if your spouse itemizes deductions.
• You can't claim the standard deduction if you're a "dual-status alien," during the tax year. 
• You also cannot claim the standard deduction if you file a federal return within a certain time period due to a change in accounting.
• Filing as an estate, trust, partnership, etc. also means that you cannot claim the standard deduction.

2023 Standard Deduction Amounts: (Returns Due April 2024)

For 2023 federal income tax returns, i.e., due in April 2024, the standard deduction amounts are as follows:

If you are at least 65 years old or blind, you can claim an additional 2023 standard deduction of $1,850 (also $1,850 if using the single or head of household filing status). If you're both 65 and blind, the additional deduction amount is doubled.

If you can be claimed as a dependent by another taxpayer, your 2023 standard deduction is limited to the greater of $1,250 or your earned income plus $400 (but the total can't be more than the basic standard deduction for your filing status).

2022 Standard Deduction Amounts: If You Haven't Filed Yet

If you haven't filed your 2022 return yet, (the IRS extended 2022 tax deadlines in several states due to storms) here are the 2022 standard deduction amounts.

Increased Standard Deduction for Certain Disaster Losses

If you have a net "qualified disaster loss," you can claim a larger standard deduction. A qualified disaster loss is a casualty or theft loss of personal-use property that is attributable to:

• A major disaster declared by the President in 2016;
• Hurricane Harvey;
• Tropical Storm Harvey;
• Hurricane Irma;
• Hurricane Maria;
• California wildfires in 2017 and January 2018;
• A major disaster declared by the President between January 1, 2018, and February 18, 2020, if the loss occurred before January 19, 2020; or
• A major disaster declared by the President before February 26, 2021, if the loss occurred between December 28, 2019, and December 27, 2020, and continued no later than January 26, 2021 (not including losses attributable to a major disaster declared only by reason of COVID-19).

You need to complete IRS Form 4684 to see if you have a net qualified disaster loss. There are also losses that you cannot claim, so if you are uncertain, consult a qualified tax professional.

Personal Exemptions

Often associated with the standard deduction, personal exemptions allow you to reduce your taxable income. That, in turn, can lower your tax bill and/or increase your tax refund. Traditionally, personal exemptions are allowed on your federal tax return for yourself, your spouse if you file a joint return, and qualifying dependents. However, no federal exemptions are allowed for a person who can be claimed as a dependent on someone else's tax return.

For each exemption allowed, you can subtract a certain amount from your taxable income. That amount is adjusted each year to account for inflation. 

So, for example, if the personal exemption amount is $4,000, then a family of four can claim a total of $16,000 in personal exemptions, which would be subtracted from the family's taxable income on a joint return. However, if adjusted gross income (AGI) is above a certain amount, the total personal exemption amount is gradually phased out. So, taxpayers with higher incomes can lose their personal exemptions.

Now for some bad news. The TCJA (otherwise known as the "Trump tax cuts,") temporarily suspended personal exemptions for the 2018 to 2025 tax years (technically, the personal exemption amount was reduced to $0 for those years). Personal exemptions are scheduled to come back in 2026 – unless Congress extends the suspension between now and then. As noted above, the Trump tax cuts nearly doubled the standard deduction for the same time span in an attempt to balance account for the loss of personal exemptions.