Standard Deduction
A fixed amount you can subtract from income instead of itemizing, reducing your taxable income.
The standard deduction is a flat amount that reduces your taxable income, available to anyone who doesn't itemize. The amount depends on filing status and is adjusted for inflation each year, with an extra amount for taxpayers 65 and older.
Most households take the standard deduction because it exceeds what they could itemize. It's also why the first slice of income is effectively tax-free: a retiree with income below the standard deduction owes no federal income tax, which creates room for low-cost Roth conversions or gain harvesting.
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.