Inquiring Editor, August 1st: Seeking Clarifications on Tax Inquiries Regarding Standard Deducations
In a significant shift for taxpayers, the One Big Beautiful Bill (OBBB) brings changes to the standard deduction amounts for 2025. Here's a breakdown of the new figures and what they mean for filers.
Firstly, it's important to note that the standard deduction is an either/or situation - either you claim the standard deduction or you itemize deductions on Schedule A. This rule remains unchanged under the OBBB.
For single filers, the standard deduction amount rises to $15,750, a jump from previous levels. Heads of household can claim a standard deduction of $23,625, while married couples filing jointly, or surviving spouses, can benefit from a standard deduction of $31,500.
These amounts are indexed to inflation, meaning they will increase with the cost of living going forward.
In addition to these increases, the OBBB introduces a new temporary $6,000 bonus standard deduction for taxpayers aged 65 and older for tax years 2025 through 2028. This bonus deduction is subject to income limits, phasing out for singles earning above $75,000 and married couples earning above $150,000.
It's worth noting that this bonus deduction is in addition to the existing extra standard deduction for age 65 or blind, which remains $1,600 for married filers and $2,000 for single filers.
So, to summarise:
- Single filers: $15,750
- Heads of household: $23,625
- Married filing jointly: $31,500
With an additional $6,000 bonus deduction for seniors (65+) subject to income limits, plus the existing age/blind additional deduction.
These new amounts reflect a permanent increase compared to prior law, designed to enhance tax benefits and provide targeted relief for seniors.
Upper-income taxpayers can claim standard deductions without worrying about the write-off being phased out based on income levels. However, it's always advisable to consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.
Lastly, it's important to remember that the answers provided in this Q&A series are for general informational purposes only. For personalised advice, subscribers of The Kiplinger Tax Letter and The Kiplinger Letter can ask Joy questions about tax topics.
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Mining opportunities in the finance sector could flourish with the increased standard deduction amounts for businesses in the new OBBB. For instance, a business could use the higher standard deduction to reduce its taxable income, potentially freeing up funds for investment in mining projects.
The introduction of a temporary $6,000 bonus standard deduction for senior taxpayers aged 65 and older, subject to income limits, could lead to an increase in ico investments by seniors, as they may have additional funds to invest due to their enhanced tax benefits.
