Standard Deduction: Definition and 2026 Amounts

The standard deduction is a fixed dollar amount that taxpayers may subtract from adjusted gross income (AGI) to arrive at taxable income, without needing to itemize individual deductions or maintain expense records. It is the simplest and most widely used deduction in the U.S. individual income tax system — approximately 90% of filers claim the standard deduction rather than itemizing, per IRS Statistics of Income data. The standard deduction is set by statute (IRC §63(c)) and adjusted annually for inflation. The One Big Beautiful Bill Act (OBBBA) of 2025 further increased the standard deduction amounts for 2026 and beyond, making the itemized deduction route even less common for most clients.

2026 Standard Deduction Amounts

For tax year 2026 (returns filed in 2027), the standard deduction amounts are:

Note: These figures reflect OBBBA-enhanced amounts plus inflation adjustment. Confirm final figures with IRS Rev. Proc. 2025 inflation adjustments when available.

Additional standard deduction for age and blindness (IRC §63(f)):

• Age 65 or older: additional $2,000 (single) or $1,600 per qualifying spouse (MFJ)
• Legally blind: same additional amounts apply independently

Example: A married couple, both age 68, would receive a $32,000 base standard deduction plus $3,200 ($1,600 × 2) for age = $35,200 total.

Dependents: Taxpayers who can be claimed as a dependent on another return have a limited standard deduction — the greater of $1,350 or earned income plus $450 (not to exceed the normal standard deduction), per IRC §63(c)(5).

Standard Deduction vs. Itemized Deductions

Taxpayers choose between the standard deduction and itemized deductions (Schedule A) — they cannot combine the two. Itemized deductions include:

• State and local taxes (SALT) — deductible up to $40,000 for 2026 under OBBBA ($20,000 for married filing separately), phasing out above $500,000 MAGI
• Mortgage interest — on acquisition debt up to $750,000
• Charitable contributions — cash (up to 60% of AGI), appreciated property (up to 30% of AGI)
• Medical expenses — in excess of 7.5% of AGI
• Casualty losses in federally declared disaster areas

With the 2026 standard deduction at $32,000 for MFJ, the breakeven point for itemizing is high. A married couple needs itemizable deductions exceeding $32,000 before itemizing produces any tax benefit. The SALT cap expansion to $40,000 under OBBBA materially changes the calculus for high-tax-state clients who previously were limited to $10,000 SALT — many more clients in states like California, New York, and New Jersey may now find itemizing worthwhile. For detailed SALT planning, see SALT Cap $40,000 Planning Guide.

The Standard Deduction and OBBBA

The OBBBA of 2025 introduced several above-the-line deductions that reduce AGI before the standard deduction is claimed — meaning taxpayers claiming the standard deduction can also benefit from these deductions:

• Tip income deduction: Up to $25,000 of qualified cash tips from certain service-industry employment is deductible above the line
• Overtime premium deduction: Up to $12,500 (single) / $25,000 (MFJ) of overtime premium pay is deductible above the line
• Car loan interest deduction: Up to $10,000 of interest on loans for U.S.-assembled vehicles, reported on new Schedule 1-A; phases out above $100,000 / $200,000 MAGI

These OBBBA above-the-line deductions stack with the standard deduction — creating meaningful new tax relief for working- and middle-class clients who do not itemize. For full mechanics, see OBBBA Tip and Overtime Deduction Guide.

Itemizing Strategies: Bunching

For clients who are close to the itemizing threshold, deduction bunching is a common strategy: concentrate two years' worth of deductible expenses (charitable donations, elective medical procedures, property tax prepayment where permitted) into a single calendar year, itemize in that year, and claim the standard deduction in the alternate year. Donor-advised funds (DAFs) are particularly effective for bunching charitable contributions — the client contributes a large lump sum to the DAF in a single year (claiming a full itemized deduction) and then distributes grants to charities over multiple years.

Related Terms

• Adjusted Gross Income — the standard deduction is subtracted from AGI to calculate taxable income; many deductions and credits are based on AGI thresholds
• Capital Gains — long-term capital gains rates are determined on the taxable income figure after the standard (or itemized) deduction is applied
• Net Operating Loss — in a year with a business NOL, taxable income may be negative regardless of the standard deduction; the standard deduction is still technically claimed but produces no additional benefit

How CPAs Use This in Practice

For most clients, the annual deduction analysis is a binary: does the sum of Schedule A items exceed the standard deduction? The decision is straightforward for clients well above or well below the threshold. The planning opportunity lives at the margin — clients within $5,000–$10,000 of the standard deduction threshold who have flexibility in timing charitable contributions, medical expenses, or state tax payments. With SALT expanded to $40,000 under OBBBA, CPAs in high-tax states should revisit the itemizing analysis for clients who previously abandoned Schedule A after the 2017 SALT cap. For the complete itemized vs. standard decision framework, see Standard vs. Itemized Deduction Guide.