Why Understanding the Standard Deduction 2025 Matters for Your Startup
The standard deduction 2025 has increased, allowing you to reduce your taxable income by a fixed amount based on your filing status. Here are the new amounts:
2025 Standard Deduction Amounts:
- Single filers: $15,750
- Married filing jointly: $31,500
- Head of household: $23,625
- Married filing separately: $15,750
- Additional deduction for age 65+ or blind: $2,000 (single/HOH) or $1,600 per person (married)
- New senior deduction (65+): Up to $6,000 per person under the One Big Beautiful Bill Act
These higher amounts, especially for seniors, offer new ways to lower your tax bill.
As a startup founder, tax planning can feel overwhelming. But understanding the standard deduction can save you thousands and simplify your filing. The standard deduction is a flat amount subtracted from your adjusted gross income (AGI). It’s adjusted for inflation annually, with major changes for 2025 from the One Big Beautiful Bill Act (OBBBA). About 88% of taxpayers use it because it’s simpler and often more beneficial than itemizing.
For founders, every tax dollar saved can be reinvested in growth. Knowing your standard deduction helps you plan withholding, estimated payments, and year-end strategy.
I’m Maurina Venturelli, VP of Go-to-Market at OpStart. I help fast-growing companies build scalable financial operations and steer complex tax changes like the standard deduction 2025 updates, so you can focus on building your business.
What Are the Standard Deduction 2025 Amounts and Key Changes?
The standard deduction 2025 has increased significantly, thanks to both inflation adjustments and the new One Big Beautiful Bill Act (OBBBA). This legislation, signed into law on July 4, 2025, introduces major changes, including a new benefit for seniors. At OpStart, we help founders steer these updates to maximize capital for their business. Understanding these new amounts is key for smart tax planning.
How does the standard deduction 2025 vary by filing status?
Your filing status determines your standard deduction amount, tax brackets, and eligibility for credits. Here are the standard deduction 2025 amounts:
| Filing Status | 2025 Standard Deduction Amount |
|---|---|
| Single Filers | $15,750 |
| Married Filing Separately | $15,750 |
| Married Filing Jointly | $31,500 |
| Qualifying Surviving Spouse | $31,500 |
| Head of Household | $23,625 |
- Single: For unmarried individuals who don’t qualify for another status. Many early-stage founders use this status.
- Married filing jointly: Offers the highest deduction. Most married couples choose this status to combine incomes and deductions on one return, which usually results in lower taxes.
- Married filing separately: Each spouse gets a $15,750 deduction, but there’s a catch: if one spouse itemizes, the other must also itemize.
- Head of household: To qualify, you must be unmarried, pay over half the costs of your home, and have a qualifying dependent.
- Qualifying surviving spouse: Allows widows and widowers with a dependent child to use the joint-filer deduction for two years after their spouse’s death.
Choosing the right filing status is crucial. The IRS provides detailed definitions for each filing status to help you decide.
Are there additional deductions for being 65 or older, or blind?
Yes, taxpayers who are 65 or older or blind can claim an extra deduction on top of their base standard deduction 2025.
- For single and head of household filers, you can add $2,000 for being 65 or older, and another $2,000 for being blind. If both apply, you get an extra $4,000.
- For married taxpayers, the amount is $1,600 per person for each condition. For example, if both spouses are over 65, they can add $3,200 to their deduction.
To qualify for the age deduction, you must be 65 by January 1, 2026, for the 2025 tax year. Blindness requires meeting specific IRS criteria, usually certified by a doctor. See IRS Publication 501 for complete rules.
The “One Big Beautiful Bill Act”: A New $6,000 Deduction for Seniors
The game-changer for 2025 is the One Big Beautiful Bill Act (OBBBA), which introduced a new $6,000 deduction for seniors. This is a brand-new benefit on top of other deductions, and you can claim it whether you take the standard deduction or itemize. If both spouses in a married couple are 65 or older, they can claim a total of $12,000. This benefit applies from 2025 through 2028.
To be eligible, you must be 65 or older and use any filing status except married filing separately. However, the deduction phases out at higher incomes. The phase-out begins at a Modified Adjusted Gross Income (MAGI) of $75,000 for single filers and $150,000 for joint filers.
For example: A single, 67-year-old with a $100,000 MAGI.
- Base standard deduction: $15,750
- Additional age deduction: $2,000
- New senior deduction: The $100,000 MAGI is $25,000 over the $75,000 threshold. The deduction is reduced by $0.06 for every dollar over ($25,000 x $0.06 = $1,500 reduction). The available deduction is $6,000 – $1,500 = $4,500.
- Total deduction: $15,750 + $2,000 + $4,500 = $22,250. This is $4,500 more than without the OBBBA.
Standard Deduction vs. Itemizing: Which Is Right for Your Startup?
Founders often ask: “Should I take the standard deduction 2025 or itemize?” The answer is simple: choose whichever gives you the bigger deduction.
About 90% of taxpayers take the standard deduction. With the higher 2025 amounts, it often exceeds total itemizable expenses and requires no extra paperwork. However, if your total deductible expenses are higher than your standard deduction, itemizing will save you more money. This is common if you have a large mortgage, live in a high-tax state, or make significant charitable donations.
While your business has its own Business Startup Tax Deductions, this choice on your personal return affects how much money you have to reinvest. The key is to add up your potential itemized deductions and compare the total to your standard deduction 2025 amount.
Common Itemized Deductions to Consider
If you’re considering itemizing, here are the most common deductions reported on Schedule A (Form 1040):
- Mortgage interest: You can deduct interest on up to $750,000 of mortgage debt. For many homeowners, this is a substantial deduction. The IRS provides detailed guidance on mortgage interest.
- State and Local Taxes (SALT): The OBBBA increased the SALT deduction cap to $40,000 ($20,000 for MFS), up from $10,000. This includes state income or sales taxes, plus property taxes. This is a major benefit for those in high-tax states, but it phases out at higher incomes (starting at $500,000 MAGI for single filers).
- Charitable contributions: If you itemize, you can deduct contributions up to 60% of your AGI. (Note: A separate provision allows non-itemizers to deduct up to $1,000, or $2,000 for MFJ).
- Medical and dental expenses: You can deduct unreimbursed expenses that exceed 7.5% of your AGI. The high threshold means this helps most with significant healthcare costs.
Itemizing requires excellent record-keeping for every expense you claim.
Who is Ineligible to Claim the Standard Deduction?
Not everyone can take the standard deduction. You must itemize if:
- You are married filing separately and your spouse itemizes.
- You are a nonresident alien or dual-status alien during the year (with some exceptions).
- You are filing a short-year return for a period of less than 12 months.
- You are an estate or trust.
Looking Ahead: How 2025 Compares to 2026
Effective tax planning means looking ahead. As you digest the standard deduction 2025 changes, the IRS has already released the 2026 figures. At OpStart, we help you anticipate these changes.
The IRS adjusts tax provisions for inflation annually to prevent “bracket creep”—where inflation pushes you into higher tax brackets without an actual increase in purchasing power. For 2026, these adjustments build on the changes from the ‘One Big Beautiful Bill Act’.
Here’s how the standard deduction 2026 amounts compare to 2025:
| Filing Status | 2025 Standard Deduction | 2026 Standard Deduction |
|---|---|---|
| Single Filers | $15,750 | $16,100 |
| Married Filing Separately | $15,750 | $16,100 |
| Married Filing Jointly | $31,500 | $32,200 |
| Qualifying Surviving Spouse | $31,500 | $32,200 |
| Head of Household | $23,625 | $24,150 |
The increases are modest but helpful: a $350 increase for single filers, $700 for married couples filing jointly, and $525 for head of household. Every dollar deducted is a dollar you can reinvest in your business.
The additional deduction for being 65 or older or blind also increases in 2026 to $2,050 for single/HOH filers and $1,650 per person for married filers. The special $6,000 senior deduction from the OBBBA is currently set to run from 2025 through 2028.
Why do 2026 numbers matter now? Smart tax planning is proactive. Knowing next year’s figures helps you optimize decisions about income, compensation, and timing major expenses like a home purchase or large charitable donation to maximize your tax advantage. For a full breakdown, see the IRS news release on 2026 tax inflation adjustments).
How to Adjust Your Withholding for the New 2025 Deductions
Knowing your standard deduction 2025 is the first step; the next is adjusting your tax withholding to match. Correct withholding improves your cash flow and prevents surprises at tax time.
Withholding tells your employer how much tax to take from each paycheck. Incorrect withholding means either giving the IRS an interest-free loan (a big refund) or facing a tax bill and penalties. For a startup, every dollar of cash flow matters.
The significant changes in 2025, including the higher standard deduction and new deductions from the ‘One Big Beautiful Bill Act’ (like the senior deduction), make it crucial to revisit your withholding. To make adjustments, you’ll submit an updated Form W-4 to your employer. You have two main options for filling it out:
- Use the deductions worksheet on Form W-4. Manually calculate your total expected deductions and enter the amount in Step 4(b). This is a good option if you have a clear picture of your tax situation.
- Use the IRS Tax Withholding Estimator. This online tool helps determine the right withholding amount. While it may not be updated for every new OBBBA provision, it does account for the new standard deduction amounts and can be very helpful for many taxpayers.
A critical word of caution: do not use both methods at the same time. Pick one and stick with it to ensure your withholding is calculated correctly.
At OpStart, we encourage founders to be proactive about withholding. Like staying on top of Changes to R&D Tax Credits, reviewing your W-4 annually or after a major life event is a small task that prevents major headaches. Take an hour now to get it right, and your future self will thank you.
Frequently Asked Questions about the 2025 Standard Deduction
The standard deduction 2025 changes have raised many questions. Here are straightforward answers to the most common ones.
How does the standard deduction affect my taxable income?
The standard deduction directly reduces your taxable income. It’s a “below-the-line” deduction, meaning it’s subtracted from your Adjusted Gross Income (AGI) to determine the amount of income subject to tax.
The formula is: AGI – Standard Deduction = Taxable Income.
For example, a single filer with a $70,000 AGI in 2025 can take the $15,750 standard deduction, reducing their taxable income to $54,250. This directly translates to tax savings.
Can I change my mind and switch between standard and itemized deductions?
Yes, you can and should choose the best method—standard or itemized—each year. Your financial situation changes, so your deduction strategy should too. For example, you might itemize in a year you buy a house, then switch back to the standard deduction the next. It’s always wise to compare your total itemized deductions to the standard deduction for the year. If you make the wrong choice after filing, you can file an amended return.
What are the key changes to the standard deduction 2025?
The key changes for 2025, driven by inflation and the One Big Beautiful Bill Act, are:
- Higher Base Amounts: The standard deduction has increased for all filing statuses (e.g., $15,750 for Single, $31,500 for Married Filing Jointly).
- New $6,000 Senior Deduction: Taxpayers 65 or older can claim an additional $6,000 deduction, even if they itemize (subject to income phase-outs).
- Existing Additional Deductions: The traditional extra deductions for being 65+ or blind still apply and can be stacked with the new senior deduction.
- Other OBBBA Deductions: The act also introduced new deductions for things like qualified tips, overtime, and vehicle loan interest, which may impact your decision to itemize.
Conclusion: Maximize Your Startup’s Tax Savings in 2025
Understanding the standard deduction 2025 is a critical part of your startup’s financial strategy. It’s about keeping more of your money to reinvest in your business.
The 2025 changes are significant. Higher standard deductions across the board and the new $6,000 senior deduction from the ‘One Big Beautiful Bill Act’ offer substantial savings. This is capital that can extend your runway or fund growth.
For founders, personal tax savings directly impact your business. Understanding these fundamentals empowers you to make smarter decisions about compensation and planning, giving you confidence and capital.
At OpStart, we handle the financial complexities so you can focus on your business. We know you’re a founder, not a tax expert. Our goal is to build a financial operation that supports your growth, not hinders it. The standard deduction 2025 is just one piece of the puzzle, but getting it right is a powerful step.
Don’t steer these waters alone. Get expert help with taxes for your startup and let us help you build a financial operation that’s ready for scale.
