Definition

The standard deduction is a fixed amount, set by filing status and adjusted yearly, that you subtract from income instead of tallying individual deductions. Most filers take it because it exceeds what they could itemize. You choose the larger of the standard deduction or your total itemized deductions.

1. Itemized Deduction

   Listing specific deductible expenses instead of taking the standard deduction.
2. Adjusted Gross Income (AGI)

   Your total income minus specific adjustments, used as a key tax reference figure.
3. Tax Deduction

   An expense that lowers the income you are taxed on.