The standard deduction is a fixed amount that reduces taxable income dollar-for-dollar, helping taxpayers save money. Most taxpayers opt for this over itemized deductions.
A single taxpayer earning $40,000 can qualify for a $14,600 deduction, lowering taxable income to $25,400, resulting in tax savings of nearly $1,800.
Head of household taxpayers can claim a larger deduction of $21,900, while married couples filing jointly may claim $29,200, usually leading to lower tax bills.
The Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction, significantly impacting taxpayers' strategies for reducing taxable income.
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