Standard Deduction 2024 | Amounts, Impact, and More

The standard deduction is a cornerstone of the U.S. tax code, providing taxpayers with a straightforward way to lower their taxable income without the need to itemize every possible deduction. Whether you’re a freelancer, a small business owner, or a salaried employee, understanding the standard deduction is crucial to smart tax planning. Each year, the IRS adjusts the standard deduction to account for inflation, impacting millions of taxpayers.

In this guide, we’ll break down the 2024 standard deduction, compare it to past years, and help you determine whether the standard deduction or itemizing is right for your income tax return. Let’s explore how you can take full advantage of this key tax benefit.

2024 Standard Deduction Amounts by Filing Status

For the 2024 tax year (filed in 2025), the IRS has set the standard deduction as follows:

• Single: $14,600
• Married Filing Jointly: $29,200
• Head of Household: $21,900
• Married Filing Separately: $14,600‍

Seniors over age 65 can claim an additional standard deduction of $1,950 for single filers and $1,550 for joint filers.

Each year, the IRS adjusts the standard deduction based on the cost-of-living index. This annual adjustment ensures that taxpayers don’t lose purchasing power due to inflation. For example, the 2024 increase in the standard deduction aligns with rising consumer costs in housing, food, and energy. Over the past decade, the standard deduction has steadily increased, providing greater tax relief to a broader range of taxpayers. This gradual rise has made it a valuable tool for millions, allowing more individuals to avoid the complexities of itemizing.

Standard Deduction vs. Itemizing: Which Is Right for You?

Choosing between the standard deduction and itemizing depends on your financial situation. If your deductible expenses (like mortgage interest, medical costs, and charitable donations) exceed the standard deduction, itemizing may save you more. However, for most taxpayers, the simplicity and value of the standard deduction make it the preferred choice.

Benefits of the Standard Deduction

• Simplicity: No need to track every receipt or deduction, making it an ideal choice for those who don’t have substantial deductible expenses.
• Automatic Eligibility: The IRS applies the standard deduction automatically unless you choose to itemize.
• Tax Savings: Nearly 90% of taxpayers opt for the standard deduction because it often leads to a lower tax bill without the hassle of itemizing.

When does it make sense to itemize your deductions?

However, similar to the standard mileage rate, the standard deduction is aimed at being an average, not a one size fits all solution. For many, it's impactful to itemize your expenses and use whichever method will allow you to deduct as much as you can. Examples of situations where itemized expenses could tip the scales in your favor include:

• High Medical Expenses: If your medical costs exceed a certain percentage of your income, itemizing could yield more savings.
• Significant Mortgage Interest: Homeowners with considerable mortgage interest may find itemizing more beneficial.
• Charitable Contributions: Large charitable donations could make itemizing worth the effort.
  

Example: If you paid $12,000 in mortgage interest, $5,000 in medical expenses, and donated $3,000 to charity, your itemizable deductions total $20,000—making itemizing a better choice than the standard deduction for a single filer.

Who Qualifies for the Standard Deduction?

Nearly all taxpayers are eligible for the standard deduction, but there are exceptions. The IRS says the following are not eligible to use the standard deduction when filing their taxes:

• You are an individual who was a nonresident alien or dual status alien during the year (**see below for certain exceptions)
• You are a married individual filing as married filing separately whose spouse itemizes deductions
• You are an individual who files a return for a period of less than 12 months due to a change in your annual accounting period
• You are filing as an estate or trust, common trust fund, or partnership

Nonresidential alien or dual status alien situations where you can take the standard deduction:

• You are a nonresident alien who is married to a U.S. citizen or resident alien at the end of the tax year and make a joint election with your spouse to be treated as a U.S. resident for the entire tax year;
• You are a nonresident alien at the beginning of the tax year who is a U.S. citizen or resident by the end of the tax year, is married to a U.S. citizen or resident at the end of such tax year, and make a joint election with your spouse to be treated as a U.S. resident for the entire tax year; and
• Students and business apprentices who are residents of India and are eligible for benefits under paragraph 2 of Article 21 (Payments Received by Students and Apprentices) of the United States-India Income Tax Treaty

How the Standard Deduction Affects Tax Brackets

Reducing your taxable income with the standard deduction can have a ripple effect on your overall tax liability. Lower taxable income means lower taxes.By decreasing your taxable income, the standard deduction may push you into a lower tax bracket, reducing the percentage you owe on each dollar of income. This effect can save taxpayers hundreds or even thousands of dollars.

Example: A single filer earning $60,000 in 2024 would only be taxed on $45,400 after the $14,600 standard deduction, potentially dropping them into a lower tax bracket.

Standard Deduction for Self-Employed Individuals

Self-employed individuals, freelancers, and gig workers often wonder if the standard deduction is applicable to them, given the unique nature of their business income and expenses. The good news is that it absolutely does apply, and it can be a powerful tool in combination with other tax strategies.

The standard deduction functions the same way for the self-employed as it does for traditional employees—it reduces your taxable income by a flat amount, streamlining the tax-filing process. For 2024, that means you can automatically subtract $14,600 (for single filers) from your taxable income, even if you don’t have itemizable expenses.

However, the self-employed have a distinct advantage: they can still claim business expenses on Schedule C in addition to the standard deduction. This means that even if you opt for the standard deduction, you’re not losing out on the ability to deduct specific business-related costs.

Combining Business Deductions and the Standard Deduction

For self-employed individuals, taking the standard deduction doesn’t mean you forfeit business-related tax benefits. You can still deduct eligible expenses, including:

• Home Office Expenses: If you operate your business from home, you can claim a portion of your rent, utilities, and internet costs on Schedule C. This deduction is separate from the standard deduction and can be a significant tax saver.
• Business Equipment: Items like laptops, printers, and office supplies are fully deductible if they’re used for business purposes. Even if you take the standard deduction, these business expenses remain deductible.
• Travel Expenses: Self-employed individuals often travel for work, whether to meet clients or attend industry events. Flights, lodging, meals, and transportation costs associated with business travel are all deductible, in addition to the standard deduction.
• Vehicle Expenses: If you drive your car for business purposes, you can deduct business mileage using the standard mileage rate (67 cents per mile for 2024) or the actual vehicle expenses like fuel and maintenance. Everlance can automatically track and categorize these trips, maximizing your deductions without extra hassle.
  

This ability to combine deductions makes the standard deduction a particularly appealing choice for those who don’t have substantial itemizable expenses outside their business costs.

Example: Let’s say a freelance web developer earns $60,000 in 2024. By taking the standard deduction of $14,600, their taxable income drops to $45,400. On top of that, they also deduct $5,000 in legitimate business expenses—like a new computer and software subscriptions—further reducing their taxable income to $40,400.

Accurate and consistent record-keeping is key to making the most of business deductions. The IRS requires detailed records for all business expenses, and this is where tools like Everlance come into play. Everlance automatically tracks your mileage, organizes receipts, and helps categorize expenses, ensuring your records are audit-proof and IRS-compliant.

Strategic Planning for Self-Employed Taxpayers

Self-employed individuals should regularly assess their income and expenses to determine whether the standard deduction is the best choice. Some strategies to consider include:

• Tracking Mileage Diligently: Mileage for client meetings, business errands, and industry events adds up quickly. Everlance’s automated tracking feature ensures you never miss a deductible mile.
• Using the Home Office Deduction Wisely: If you qualify for the home office deduction, keep detailed records of home-related expenses and consider using Everlance’s tools to categorize and store these costs.
• Contributing to Retirement Plans: Contributions to self-employed retirement accounts like a SEP-IRA can reduce taxable income further. These contributions can be claimed alongside the standard deduction, making them a key strategy for tax savings.