Standard deduction

Explanation

When you file a federal return, you subtract either the standard deduction or your itemized deductions (such as state and local taxes, mortgage interest and charitable gifts), whichever is larger. The result is your taxable income, which the tax brackets apply to.

For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly. It is adjusted for inflation each year. People age 65 or older (or blind) get an additional amount, about $2,050 for a single filer and $1,650 per qualifying spouse in 2026. Separately, for tax years 2025 through 2028, people 65 and older can claim an extra “senior” deduction of up to $6,000 each, which phases out at higher incomes (starting at $75,000 of modified AGI for single filers and $150,000 for joint filers). Check current IRS figures, since these amounts change.

Most households take the standard deduction. Itemizing makes sense only when your itemized total exceeds it. The cap on state and local tax (SALT) deductions was raised to about $40,000 for 2025 and is scheduled to rise slightly each year through 2029, with a phase-down for high incomes, so more people in high-tax states may itemize than in recent years.

In scenarios, the app applies the standard deduction by default and indexes it forward. In early retirement years with little other income, the standard deduction is a key part of planning: traditional IRA withdrawals or Roth conversions up to that amount are free of federal income tax.

Example

A single filer in 2026 has $70,000 of wages and these possible itemized deductions: $9,000 of state and local taxes and $4,000 of charitable gifts, totaling $13,000.

• Standard deduction: $16,100, which is larger than $13,000, so take it.
• Taxable income: $70,000 − $16,100 = $53,900

In early retirement, a married couple (both under 65) with no other income could withdraw or convert $32,200 from a traditional IRA in 2026 and owe no federal income tax on it.