Standard Deduction
Authority: IRC §63(c)
The standard deduction is the no-questions-asked amount every taxpayer may subtract from adjusted gross income instead of itemizing. For 2025 it is $15,750 for single filers and $31,500 for married filing jointly, indexed annually, with additional amounts for taxpayers who are 65 or older or blind. Roughly nine in ten filers take the standard deduction because it exceeds what they could itemize. The choice is annual: a taxpayer compares itemizable expenses (state and local taxes up to the cap, mortgage interest, charitable gifts, large medical costs) against the standard amount and takes the larger. This binary creates the "bunching" strategy: concentrating two years of charitable giving into one year to clear the standard deduction hurdle, often through a donor-advised fund, then taking the standard deduction the off year. Business deductions on Schedule C or a K-1 are separate and do not compete with the standard deduction.
Example
A married couple has $9,000 of state taxes, $8,000 of mortgage interest, and $5,000 of donations, totaling $22,000. Since the standard deduction is $31,500, they take the standard amount and save nothing extra by tracking receipts that year.
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