Good News for This Year: The Standard Deduction Is Going Up


The IRS recently announced a change that could shave a bit more off your taxable income. In November, as part of cost-of-living adjustments, the IRS increased the standard deduction for the tax year beginning January 1, 2020.
 

Filing Status

2020 Standard Deduction

Increase from 2019

Single or married filing separately

$12,400

$200

Head of household

$18,650

$300

Married filing jointly

$24,800

$400

 

Back in 2017, the Tax Cuts and Jobs Act nearly doubled the standard deduction for both individual taxpayers and married taxpayers filing jointly, resulting in more taxpayers taking this deduction instead of itemizing. About 90 percent took the standard deduction in 2018 compared with just 70 percent who did so the previous year.

 

But the upcoming increases don’t necessarily mean you should plan to take the standard deduction instead of itemizing. You may find it’s worth going through both calculations to see if your total itemized deductions would exceed the standard deduction. Taxpayers may still itemize interest on mortgages up to $750,000 ($1 million if you bought the property before December 15, 2017), state and local taxes (capped at $10,000), charitable donations, and medical expenses in excess of 10 percent of adjusted gross income.

 

Every situation is different, so be sure to consult with a tax preparation specialist to determine the best approach for you.