Recent IRS data has suggested that roughly 90% of taxpayers claim the standard deduction on their individual tax return as opposed to itemizing their deductions. Standard deduction amounts were temporarily increased by the Tax Cuts and Jobs Act of 2017 (TCJA), with the increased amounts scheduled to expire after 2025. However, the recent passage of the One Big Beautiful Bill Act (OBBB Act) included enhancements and extensions of the increased standard deduction amounts for individuals as well as the elimination of the deduction for personal exemptions. The OBBB Act preserved the higher amounts permanently and has increased the 2025 standard deduction by providing an additional year of inflation adjustment. The new 2025 standard deduction amounts are $15,750 for single filers and married individuals filing separately, $23,625 for heads of household, and $31,500 for married individuals filing jointly. These amounts will be adjusted for inflation annually moving forward.

Deductions for personal exemptions were set to return in 2026 after they were suspended from 2018-2025 as part of the Tax Cuts and Jobs Act. The OBBB Act permanently eliminated the personal exemption deduction and introduced a temporary deduction for those 65 and older. This provision allows taxpayers and their spouses, if filing jointly, to claim an additional $6,000 deduction per individual for years 2025-2028, subject to income limitations.

Please contact your tax advisor at BCS if you have any questions regarding the new standard deduction amounts or the passage of the One Big Beautiful Bill Act.