What Was the Standard Deduction in 2021?

The standard deduction provides a fixed dollar amount that reduces the taxable income for many individuals. It offers a simplified way to lower the amount of income subject to federal income tax, serving as an alternative to itemizing specific expenses. Its value is adjusted annually for inflation to reflect changes in the cost of living.

2021 Standard Deduction Amounts

For the 2021 tax year, standard deduction amounts varied based on a taxpayer’s filing status. An individual filing as Single could claim a standard deduction of $12,550. This amount also applied to a married individual who filed separately, meaning they reported their income and deductions independent of their spouse.

Married couples who filed jointly were eligible for a standard deduction of $25,100. This same amount applied to a Qualifying Widow(er). A Head of Household could claim a standard deduction of $18,800. For an individual claimed as a dependent, their standard deduction was limited to the greater of $1,100 or $350 plus earned income, not exceeding the regular standard deduction for their filing status.

Additional Standard Deduction for 2021

Taxpayers who met certain criteria could receive an additional standard deduction. For the 2021 tax year, an additional amount was available for individuals who were age 65 or older and/or blind.

For married taxpayers and surviving spouses, the additional standard deduction was $1,350 for each qualifying condition (age or blindness). For example, if both spouses were 65 or older, they would add $2,700. For single taxpayers or those filing as Head of Household, the additional standard deduction was $1,700 for each qualifying condition.

Choosing Between Standard and Itemized Deductions

Taxpayers have the option to choose between taking the standard deduction or itemizing their deductions. The decision is typically based on which method results in a larger reduction of their taxable income. Itemized deductions are specific eligible expenses subtracted from adjusted gross income.

Common itemized deductions include certain medical expenses that exceed 10% of adjusted gross income, state and local taxes up to a combined limit of $10,000, and home mortgage interest. Charitable contributions to qualified organizations can also be itemized. To determine the most advantageous approach, a taxpayer would compare their total itemized deductions to the standard deduction amount for their filing status.

Situations Where the Standard Deduction Cannot Be Claimed

While the standard deduction simplifies tax filing for many, there are specific circumstances under which a taxpayer cannot claim it. One such situation applies to a married individual who files a separate return if their spouse chooses to itemize deductions. In this instance, both spouses must either itemize or take the standard deduction.

The standard deduction is also not available to a nonresident alien or a dual-status alien during the tax year, with certain exceptions for those married to U.S. citizens or resident aliens. An individual filing a tax return for a period of less than 12 months due to a change in their annual accounting period cannot claim the standard deduction. Estates, trusts, common trust funds, and partnerships are also ineligible to claim the standard deduction.