One of several key provisions included in the Tax Cuts and Jobs Act was the nearly doubled standard deduction for taxpayers. The amounts of new standard deduction, which went into effect on Jan. 1, 2018 and expires on Dec. 31, 2025, is as follows:
$24,000 for joint returns or a surviving spouse
$18,000 for an unmarried individual with at least one qualifying child
$12,000 for single filers
The Act retains the enhanced standard deduction for the blind and elderly that was already available. Additionally, the standard deduction amount will be indexed for inflation using C-CPI-U in tax years beginning after 2018.
Impact of New Standard Deduction
The doubling of the standard deduction will effectively eliminate most individuals from claiming itemized deductions other than higher-income taxpayers.
For example, for the vast majority of married taxpayers filing jointly, the only itemized deductions available to them may include:
Allowable mortgage interest
State income and local income/property taxes (up to $10,000)
Charitable deductions that exceed $24,000
With fewer individuals claiming those deductions, this could have a broader impact on both real estate prices and charitable organizations despite retaining those two deductions, in modified form.
Additionally, the increase in the standard deduction should be considered in combination with the Act’s elimination of the deduction for the personal exemption. This elimination of the personal exemption will reduce the net benefit of the increase in the standard deduction for some taxpayers.