2020 IRS Standard Deductions and Exemptions

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Last updated on April 5, 2021 Comments: 39

There are some changes to the standard IRS deductions and exemptions for 2021, with these being slightly higher than in 2020.

However, in a few cases, the deduction amounts for 2021 will remain the same as the previous year.

For example, state and local sales tax, medical and dental expenses, and percentage limits for charitable cash donations given to public charities.

On the plus side, standard deductions, income thresholds for tax brackets, and retirement savings limits have gone up.

We have all the numbers here and how the change will affect taxpayers.

What Are Tax Deductions?

Most taxpayers can choose between itemizing tax deductions and taking the standard deduction. Itemizing, which requires accurate record-keeping, allows you to take deductions for specific expenditures from the tax year.

The standard tax deduction is a fixed amount set by the IRS each year and is usually based on your filing status. Either way, your deductions reduce the amount of your taxable income. In other words, they lower the amount of overall taxes you owe.

In most cases, if you can show that you’ve had more deductible expenses than the amount of the default standard deduction, it’s better to itemize. This way, you reduce your taxable income and pay less in taxes.

However, if you don’t have enough itemized deductions, taking the standardized deduction works out best.

In 2019, it was estimated that only about 13.7% of U.S. households itemized their deductions. With a higher standard deduction, it will be more difficult for taxpayers to itemize enough to cross that threshold.

However, you may be missing out on certain deductions like mortgage interest.

IRS publication 501 outlines each year’s deduction amounts. There are some cases where you can make adjustments to the standard deduction. For example—if you are 65 or older or if you are blind—you get a higher standard deduction.

Tax Year20212020201920182017 2016 20152014 2013 2012 20112010
Single$12,550$12,400$12,200$12,000 $6,350 $6,300 $6,300 $6,200 $6,100 $5,950 $5,800 $5,700
Married filing jointly$25,100$24,800$24,400$24,000 $12,700 $12,600 $12,600 $12,400 $12,200 $11,900 $11,600 $11,400
Married filing separately$12,550$12,400$12,200$12,000 $6,350 $6,300 $6,300 $6,200 $6,100 $5,950 $5,800 $5,700
Head of household$18,800$18,650$18,350$18,000 $9,350 $9,300 $9,250 $9,100 $8,950 $8,700 $8,500 $8,400
Personal exemptionN/AN/AN/ARepealed $4,050 $4,050 $4,000 $3,950 $3,900 $3,800 $3,750 $3,650

  • If you are age 65 or older or legally blind, your standard deduction increases by $1,700 if you file as single or head of household.
  • If you are married filing jointly and you/or your spouse is 65 or older, your standard deduction increases by $1,350.
  • If both you and your spouse are 65 or older, your standard deduction increases by $2,700. If one of you is legally blind it increases by $1,350. If both of you are legally blind, it increases by $2,700.
  • If you are a qualifying widow(er), your standard deduction increases by $1,350 if you are 65 or older and/or legally blind.

What About Itemized Tax Deductions?

At the end of 2018, the Tax Cuts and Jobs Act eliminated quite a few itemized deductions. One example is that you can no longer deduct tax preparation fees or unreimbursed employee expenses. The idea was to simplify the tax code. While it has become a lot more straightforward compared to before, it wasn’t necessarily designed to give Americans a tax cut.

For most, here are some itemized deductions that you can still take advantage of:

  • State and local taxes
  • Mortgage interest
  • Medical expenses
  • Charitable contributions

Keep in mind that itemized deductions will have their own qualification criteria, rules, and restrictions. You’ll want to make sure to check if you’re able to deduct some or any at all.

To determine whether it’s better to take the standardized or itemized deduction, try estimating qualifying expenses from the categories mentioned above. If the amount is close to what this year’s standard deduction will be, then it could be worth it to do a more thorough calculation to get a better picture of the better choice.

What About Tax Credits?

Tax credits reduce your tax liability directly. In 2021, the maximum earned income credit (EIC) for qualifying taxpayers is $6,728 (for those who have at least three qualifying children). This tax credit starts to phase out if you earn over a certain qualifying amount.

Also, if you have a child under 17 by the end of the 2021 tax year, you will be able to qualify for the child tax credit. You may be able to claim up to $2,000 per qualifying child–there’s no upper limit.

For the lifetime learning credit, the amount is gradually reduced (phased out) if your MAGI is between $118,000 and $138,000 (if you file a joint return).

If you’re a head of household or a single filer, your MAGI starts at $59,000 and phases out at $69,000. Unfortunately, you won’t be able to claim this credit if you’re married but filing separately.

What Does it Mean for My Taxes?

Of course, the main question for most tax filers is, “How does this affect me?” Here are a few bottom-line takeaways to consider:

  • You’re still more likely to take the standard deduction. The higher standard deduction alone will be enough to push many taxpayers into taking it rather than itemizing. But taxpayers who used to itemize due to hefty mortgage interest, lots of charitable contributions, or high state and local income and property taxes may find those more-limited deductions aren’t enough to push them over the threshold now.
  • Taxes may be simpler in some ways but more complex in others. Taking the standard deduction is, indeed, simpler than itemizing. But it may take some time to hash out all the practical implications of the tax law. So be prepared for some complications along the way.

Again, each tax situation differs depending on different variables like your filing status. If you’re unsure, it’s best to consult a reputable tax professional as this person should be up to date on tax laws.

If you would like to learn more about how to navigate your taxes, check out the informative course offered by Cofield’s Concepts.

Article comments

Ward Brining says:

For years I’ve been able to itemize my deductions. However, I was told that I should have been able to use the amount charged for my managed IRA account as an itemized deduction until this next filling. I’ve never used any of the amounts (ever) charged against my account as part of my itemized deductions. Am I now be able to file an amended form for those past charges and if so for how many past years. My accountant thinks I should be able to and my question to him is why hasn’t he been doing that at each of my filing years. Help please. For the past years that would be a sizable amount if it is allowed.

Pat Hayes says:

Folks should know they are not always going to reap the refund of $1400.00 for the child tax credit. It is limited to 15% of earned income to a max of $1400.00

gene says:

what is the maximum ira withdrawl with no filing requirement for filing staus married filing separate
no income
no ss
under 65 years

joan says:

is the additional deduction $1600 for over 65?

valentine Stauder says:

I am 83 years old nd am a widower (7years) I am retired from the Postal Service and my income is 29.000 my social security is 2200.00 I pay taxes on my home and medical plan and medicare I also donate 3400. yearly to charities and church. I drive to all my doctors is that miiage deductible last year I paid 1831. in taxes will 2018 be as bad for me.

DAVE Y. says:

at first i loved trump n thought the tax cuts were great n would help my wife n me who only make a combined $28,000. Trump keep saying couples making $30,000 or less would pay no federal taxes.Now i look and C that they took the personal exemption away { $8,300 for couples } n that means u pay no taxes if u make less then $24,000.He LIED n now i c that alot of ppl r hurt by these GREAT { NOT ] TAX cuts….They do help Trump, his family, companies n RICH friends in business and i FINALLY c trump for the liar he is besides acting mentally ill etc..

Emily says:

There’s always a catch…
We are Married Filing Jointly. We itemize because mortgage interest and high medical expenses. Our itemized deductions are around $36,000 for 2017. We also get 2 personal exemptions totaling $8100. That’s $44,100 for 2017.
Based on the table above, this year (2018) we have approximately $36,000 itemized deductions and no personal exemptions. That’s 36,000 for 2018.
It looks like the burden this year will fall on tax payers who are itemizing. In our case, it is $1190 extra in taxes (effective tax bracket 14.7%).
Let’s not forget that 2015 and 2016 medical expenses exceeding 10 percent of AGI were deductible for tax payers under 65, instead 7.5 percent in previous years.

kikkenit2 says:

Where I live $24k itemizing is a $500,000 home loan.
This new tax law just dropped $10k in my home value
and losing the personal exemption cost me $500 a year.
My federal income taxes just went up a lot.

kikkenit2 says:

The child tax credit has been there for years. If you gross
$400k it goes up. Worthless for everybody I know. Have more
than 1 child and you pay $500 more now for every child.
$12k higher standard deduction only covers 2 adults and 1 child.

Neeraj Anand says:

No sir it is going to be much more because if think how much is the int on montage if it is more than 20,000 it will be reduced to 20000 taking if the lo n is @4% the maximum loan eligible is 500,000.

willie says:

“taxpayers can deduct $2,000 per qualifying child”…..I thought this was a credit, not a deduction.

Rob Berger says:

It is a tax credit.

Sherry Brist says:

New to this using Turbo software so I’m fresh to this but there best results for me was Standard Deduction. Now is that what’s going to be giving to me or is that I owe them money and I won’t be receiving a refund can anybody help me please

Anonymous says:

Capital gains are taxed at a lower rate because the proceeds from the investments are used to create and/or sustain businesses that HIRE people. Also investors do not always make money. Many times they LOSE money. The lower tax rate is to give them incentive to put their money at RISK which allows more people to be HIRED. Also, LOSSES from investments are LIMITED in their deductibility, while their gains must be reported without limit.

Anonymous says:

Last year I gave each of my seven children $4000 as a gift. Is that deductible?

Johnowhite says:

This is a common question. The simple answer is, no. Nor is it income to the recipients.

Anonymous says:

It isn’t that hard to figure out your itemized deductions if you use tax software.

Anonymous says:

I have always taken the standard deduction in the past. Taxes are a gray foggy area for me, so it’s always nice to be educated on any of it!

Anonymous says:

I have always taken the standard deduction in the past. Taxes are a gray foggy area for me, so it’s always nice to be eductaed on any of it!

Anonymous says:

I’m a 20-something so it’s all about the standard deduction. I just started up my own company so soon there will be a whole new host of tax issues to look out for. I’m looking forward to the challenge.

Anonymous says:

I figure it both ways every year and take the larger (obviously!) Because we move a lot, and sometimes live in rentals and sometimes live in houses we own, the best choice changes every year.

Just because you own a home doesn’t automatically mean that the itemized deduction is a better choice for you. If your mortgage interest is small, even including mortgage interest may not bring your itemized deductions up to the amount of the standard deduction. Plus, less paperwork with the standard deduction!

Anonymous says:

If you use tax software it will figure both and tell you which is better.

Anonymous says:

A dependent doesn’t increase the standard deduction for their parents, do they? Instead they get their own, which is equal to their earned income plus $300, but no lower than $950 and no higher than $5,800.

Anonymous says:

I always take the standard deduction because I too rent. Though I am not as young as some of the others who have said this. And being married just makes the standard deduction twice as big 🙂

Anonymous says:

I’ve never itemized because I’m young and rent. In fact, I’m not even sure what qualifies when you itemize.

Anonymous says:

Currently, I itemize, but expect to go to a standard deduction when I retire. If circumstance change, I change with it!

Anonymous says:

I am a standard deduction kind of guy. I never have enough itemized deductions to match it, but I always check.

Anonymous says:

I usually check which option gives me the smaller tax bill. Using an online software like Turbotax, first I do my tax using the standard deduction and I write down the final tax bill. Then I switch from standard deduction to itemize. If the new tax bill is higher, it only takes me a second to switch back to standard deduction. I always plan on itemizing (keep all my receipts) because I never know how much I will end up spending on health care.

Anonymous says:

I am in the 20-something/single/renter category, so I will take the standard deduction and not worry about it. As far as I understand it, without a mortgage there are very few reasons that would justify itemizing.

Anonymous says:

I let an accountant handle it, between that and a small business it is simpler letting a professional decide what the best option is for me. That way I don’t have to worry as much that there is a mistake present!

Anonymous says:

Concur with the above posting 110%!

We pay our CPA/Tax Preparer $275/year (that’s just 75 CENTS/day annualized!) to prep & submit (electronically) BOTH our Fed & State personal income taxes – it’s always money well invested!

While his fee is not deductible (we’re fully retired) – his expertise ensures our income & deductions are correct. He reviews ALL associated supporting paperwork for accuracy (e.g., 1099-Rs, investment gains/losses, mortgage interest & property tax verifications, non-business energy tax credits), often finding deductions we would have overlooked had we tried to do our returns ourselves. Furthermore, as a ‘signer’ attesting to his preparation work, we no longer worry about an audit as we’ll have a true professional at our side!

Anonymous says:

I’ve always just taken the standard deduction, mostly because I’ve used online software to file my taxes and the itemized deductions always seemed so complicated, I was afraid I would make some sort of mistake.

Anonymous says:

We definitely itemize. This is primarily driven by owning a home, which includes interest expense and property taxes that are included in the itemized deductions.

Anonymous says:

I itemize as well due to mortgage interest and student loan interest.

John Zoe says:

These deductions should NOT be allowed. All this does is encourage individuals to go into debt. One wonders why people in this nation believe ‘debt is good’? Savings is good. Make the sacrifice to save and then pay in ‘cash’ for the things that you need. All it takes is DISCIPLINE.

kk says:

Did you buy your house for cash?

Anonymous says:

I’m young (early 20s) and a renter, so I don’t think I’ll be itemizing anytime soon. It’s all about the adjustments and credits for me!

Anonymous says:

I itemize mainly due to high property taxes.

Anonymous says:

The standard deduction is about all you get when you’re retired. With the exception of one year where Medical Expenses (Dental expenses not covered by Medical Insurance) exceeded the standard deduction, all of my filings have been based on the standard deduction. But I’m looking forward to taking more exemptions when I turn 65 in a couple of years – followed by my wife a couple of years later. I guess those extra exemptions are like having a nice scenic view appear on your way downhill… 🙂