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Understanding the Standard Deduction for 2024
Millions of taxpayers utilize the standard deduction to lower their taxable income on federal tax returns. The standard deduction is a predetermined amount you can subtract from your adjusted gross income, reducing your taxable income and tax bill. This deduction can save you time and effort, and when it exceeds your potential itemized deductions, it can also save you money.
What Is the Standard Deduction for 2024?
The IRS reviews standard deductions annually for cost-of-living adjustments. For the 2024 tax year, the IRS has increased standard deductions by approximately 5% over 2023 levels. These increases will affect your taxes when you file in 2025. The 2024 standard deductions are as follows:
- Single and Married Filing Separately: $14,600
- Head of Household: $21,900
- Married Filing Jointly: $29,200
How Does the Standard Deduction Work?
The standard deduction is a set amount you can exclude from your taxable income when calculating federal income taxes. It varies by filing status: single, head of household, married filing jointly, or married filing separately. Here are some key points:
- You can’t itemize: If you claim the standard deduction, you can’t claim individual itemized deductions like mortgage interest or charitable donations.
- Tax filing is simpler: Standard deductions don’t require calculations or documentation; you simply find your deduction by filing status and enter it.
- Standard deductions are generous: They effectively make a portion of your income tax-free by excluding it from taxable income.
- Additional deductions: If you’re blind or over 65, you may take an additional standard deduction of $1,950 if filing single or head of household, or $1,550 if married.
How Much Can I Save With the New Standard Deduction?
Single taxpayers can save up to $277, and married couples up to $555, based on the increased standard deductions for 2024. Your actual tax savings will vary based on your filing status, tax bracket, and any changes to your income. Here are potential savings for different tax brackets:
Potential Savings for Single Filers in 2024
| Rate | Tax Bracket | Potential Savings |
|---|---|---|
| 10% | $0 to $11,600 | Up to $75 |
| 12% | $11,601 to $47,150 | Up to $90 |
| 22% | $47,151 to $100,525 | Up to $165 |
| 24% | $100,526 to $191,950 | Up to $180 |
| 32% | $191,951 to $243,725 | Up to $240 |
| 35% | $243,726 to $609,350 | Up to $262.50 |
| 37% | Over $609,350 | Up to $277.50 |
Potential Savings for Married Couples in 2024
| Rate | Tax Bracket | Potential Savings |
|---|---|---|
| 10% | $0 to $23,200 | Up to $150 |
| 12% | $23,201 to $94,300 | Up to $180 |
| 22% | $94,301 to $201,050 | Up to $330 |
| 24% | $201,051 to $383,900 | Up to $360 |
| 32% | $383,901 to $487,450 | Up to $480 |
| 35% | $487,451 to $731,200 | Up to $525 |
| 37% | Over $731,200 | Up to $555 |
When Should You Claim the Standard Deduction?
Opt for the standard deduction when your itemized deductions don’t exceed the standard deduction amount. For single taxpayers in 2024, the standard deduction is $14,600. Common itemized deductions include:
- Mortgage interest: Deduct interest on up to $750,000 of your mortgage.
- Medical expenses: Deduct unreimbursed expenses exceeding 7.5% of your adjusted gross income.
- State and local taxes: Deduct up to $10,000 in state and local taxes, including property tax and vehicle registration fees.
- Charity donations: Deduct up to 60% of your adjusted gross income for charitable contributions.
When Should You Itemize?
If your deductions exceed the standard deduction, itemize. This requires tracking and documenting your expenses and ensuring compliance with IRS requirements. While itemizing involves more work, the tax savings can be significant.
Who Can’t Claim the Standard Deduction?
Some taxpayers are ineligible for the standard deduction and must itemize. This includes those who:
- Are married filing separately and their spouse itemizes deductions.
- Were nonresident aliens or dual-status aliens during the tax year.
- Are filing a return for a period of less than 12 months due to a change in the annual accounting period.
- Are filing as an estate, trust, common trust fund, or partnership.
The Bottom Line
The new standard deductions for 2024 will impact your taxes when you file in 2025. Adjustments for inflation help align standard deductions with the changing cost of living and rising incomes. For personalized advice, consider using tax preparation software or consulting a tax professional.
For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to assist you with all your mortgage requirements.
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