7.1 Standard Deduction by Filing Status

The standard deduction is one of the most fundamental concepts in individual taxation. It represents a fixed dollar amount that taxpayers can subtract from their Adjusted Gross Income (AGI) to reduce their taxable income. For the vast majority of taxpayers (approximately 90%), claiming the standard deduction is simpler and more beneficial than itemizing on Schedule A.

2025 Standard Deduction Amounts (OBBBA-adjusted)

Rev. Proc. 2024-40 originally set the 2025 amounts at $15,000 / $30,000 / $22,500. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, retroactively increased each amount by $750 / $1,500 / $1,125 for the entire 2025 tax year:

Key Observations:

• MFJ and QSS receive the same amount—exactly double the Single amount
• MFS receives the same amount as Single (not half of MFJ)
• HoH falls between Single and MFJ, reflecting the additional expenses of maintaining a household with a qualifying person

Existing Additional Standard Deduction for Age 65+ or Blindness (unchanged)

Taxpayers who are age 65 or older or legally blind at year-end qualify for an additional standard deduction added to the basic amount above. OBBBA did not change these amounts; they remain at the 2024 levels rounded up:

Age 65 Rule: For tax purposes, you are considered age 65 on the day before your 65th birthday. For the 2025 return, a taxpayer is considered 65 if born before January 2, 1961.

Legal Blindness: Eyesight no better than 20/200 in the better eye with corrective lenses, OR field of vision 20 degrees or less. A statement from an ophthalmologist/optometrist is required.

NEW: OBBBA Senior Bonus Deduction (Tax Years 2025-2028)

OBBBA added a brand-new temporary deduction for older taxpayers. This is separate from—and stacks on top of—the existing age-65 additional standard deduction above.

Senior Bonus Deduction Rules:

• Amount: Additional $6,000 per qualifying individual age 65 or older at the end of the tax year
• SSN required: Each qualifying individual must have a valid Social Security Number
• Available to BOTH itemizers AND standard-deduction filers (does not require Schedule A)
• Stacks with the existing $2,000 / $1,600 age-65 additional standard deduction
• MFS NOT eligible (statutory bar)
• Sunset: Expires December 31, 2028

MAGI Phase-Out (6% per dollar over threshold):

Example – Single Senior, MAGI $80,000, Age 67:

• Basic 2025 standard deduction: $15,750
• Age 65+ additional: $2,000
• Senior Bonus Deduction: $6,000 minus ($80,000 – $75,000) × 6% = $6,000 – $300 = $5,700
• Total deduction: $23,450

Example – MFJ, Both Spouses Age 66, MAGI $140,000:

• Basic 2025 standard deduction: $31,500
• Age 65+ additional: $1,600 × 2 = $3,200
• Senior Bonus: $6,000 × 2 = $12,000 (no phase-out; MAGI under $150,000)
• Total deduction: $46,700

Example – MFJ, Both Age 70, MAGI $200,000:

• Basic 2025 standard deduction: $31,500
• Age 65+ additional: $3,200
• Senior Bonus before phase-out: $12,000; phase-out = ($200,000 – $150,000) × 6% = $3,000; bonus = $9,000
• Total deduction: $43,700

Dependents' Standard Deduction Limitation (2025)

If a taxpayer can be claimed as a dependent on someone else's return, their 2025 standard deduction is the GREATER OF:

1. $1,350 (the minimum), OR
2. Earned income + $450

The total cannot exceed the regular standard deduction for the dependent's filing status ($15,750 for Single in 2025).

Example: Sarah, age 17, is claimed as a dependent by her parents. In 2025 she earns $4,200 from a summer job and has $800 in interest.

• $4,200 + $450 = $4,650
• Greater of $1,350 or $4,650 = $4,650 (less than $15,750 cap)
• Sarah's 2025 standard deduction: $4,650

Taxpayers Who CANNOT Claim the Standard Deduction

Certain taxpayers are not allowed to claim the standard deduction and must itemize:

1. MFS when spouse itemizes: If one spouse itemizes, the other must also itemize.
2. Nonresident aliens (with limited exceptions for those married to U.S. citizens/residents who elect resident treatment).
3. Dual-status aliens for the year of status change.
4. Short tax year filers (less than 12 months due to change in accounting period).
5. Estates and trusts (use an income distribution deduction instead).
6. Partnerships (deduction passes through to partners individually).

Standard Deduction vs. Itemizing: The Decision

Taxpayers should claim the larger of their standard deduction or total itemized deductions. Common Schedule A items include:

• Medical expenses over 7.5% of AGI (permanent under OBBBA)
• State and local taxes (SALT) – 2025 cap raised to $40,000 MFJ / $20,000 MFS under OBBBA
• Mortgage interest on up to $750,000 acquisition debt (TCJA limit, made permanent by OBBBA)
• Charitable contributions
• Casualty/theft losses only from federally declared disasters

With the OBBBA-bumped standard deduction and the new senior bonus, even fewer taxpayers benefit from itemizing—but the much higher SALT cap pulls more high-tax-state filers back into itemizing.

Personal Exemption Permanently Suspended

OBBBA made permanent the TCJA suspension of the personal exemption (still $0). Taxpayers no longer claim a personal exemption deduction—the standard deduction and child/dependent credits replace it.

Looking Ahead: 2026+

• Standard deduction inflation-adjusts in 2026 from the $15,750 / $31,500 base.
• The Senior Bonus Deduction continues through 2028, then sunsets.
• The personal exemption stays suspended permanently under OBBBA.

EA Exam Tips

High-Frequency 2025 Topics:

• Memorize 2025 standard deduction: $15,750 / $31,500 / $23,625 (Single/MFJ/HoH)
• Remember OBBBA raised these from Rev. Proc. 2024-40 figures retroactively
• Senior Bonus = $6,000 per senior (65+), with MAGI phase-out and SSN requirement
• The age-65 / blind additional ($2,000 or $1,600) is on top of the Senior Bonus
• MFS cannot claim the Senior Bonus
• Dependent standard deduction floor is $1,350 in 2025 (up from $1,300)
• 'Age 65 on day before birthday' → born before January 2, 1961 for 2025

Common Exam Traps:

• Confusing 2024 figures with 2025 figures—always use the post-OBBBA numbers
• Stacking the Senior Bonus on top of the existing $2,000/$1,600 (they are separate)
• Forgetting the $6,000 phase-out at MAGI $75K/$150K
• Assuming the Senior Bonus is only for itemizers (it is available to all except MFS)