This guide is for readers in Australia who have US filing obligations or cross-border income. US federal rules are separate from Australian income-tax deductions, so don't assume the two systems work alike. The figures below are US dollars, and they apply only to US federal returns.
Key Takeaways
- The 2026 amount varies by filing status, from $16,100 (single) to $32,200 (joint).
- A deduction lowers taxable income. It doesn't cut your tax bill dollar-for-dollar.
- Check the age/blind add-on, the $6,000 senior deduction and dependent rules.
- Compare against itemised deductions and confirm figures on IRS.gov.
What Does the Standard Deduction Mean for Tax Year 2026?
The standard deduction is a set amount you subtract from income before working out taxable income. Which amount applies depends on filing status, plus any age, blindness or dependent rules.
Deduction, credit and exemption
These three get confused constantly:
- Deduction: reduces the income that gets taxed.
- Credit: is subtracted from the tax you owe.
- Exemption: reduces taxable income on a per-person basis.
Personal exemptions remain $0 for 2026, as the IRS inflation release confirms. The One Big Beautiful Bill Act made that permanent.
A quick illustration: a $1,000 deduction removes $1,000 from taxable income, so at a 22% marginal rate it saves about $220. A $1,000 credit saves $1,000.
Tax year versus filing season
Tax year 2026 covers income earned in calendar 2026. You file that return in 2027.
The return filed in 2026 is for tax year 2025, which is a common source of mix-ups, particularly for Australians whose financial year runs July to June.
2026 Standard Deduction Amounts by Filing Status
Here are the official amounts from Rev. Proc. 2025-32, compared with 2025 (after the OBBBA increase):
| Filing status | 2025 | 2026 | Increase |
|---|---|---|---|
| Single | $15,750 | $16,100 | $350 |
| Married filing jointly | $31,500 | $32,200 | $700 |
| Married filing separately | $15,750 | $16,100 | $350 |
| Head of household | $23,625 | $24,150 | $525 |
| Qualifying surviving spouse | $31,500 | $32,200 | $700 |
What drove the changes
The 2025 figures were first set by inflation at $15,000 (single) and $30,000 (joint). Legislation (P.L. 119-21) then raised them by $750 and $1,500. The 2026 increases over final 2025 are inflation indexing only.
Filing status sets the base
- Head of household: Generally unmarried (or considered unmarried) at year end, you pay more than half the cost of keeping up a home, and a qualifying person lives there more than half the year.
- Qualifying surviving spouse: Available for two years after a spouse's death if a qualifying child lives with you all year and you pay more than half the home's costs.
A simple example
Say a single filer has $70,000 of income. Subtracting the $16,100 standard deduction leaves $53,900 of taxable income, before any other adjustments.
That figure is not a final tax bill. Brackets, credits and other items come next.
You choose either the standard deduction or itemised deductions, not both. Separate deductions, such as the senior deduction and the new charitable deduction, can still apply depending on your circumstances.
Additional Deductions and Special Rules in 2026
Age 65+ or blind
The additional standard deduction for 2026 is:
- $1,650 per condition if married or a surviving spouse
- $2,050 per condition if unmarried and not a surviving spouse
Age and blindness count separately, so one person who is both 65+ and blind gets two add-ons. On a joint return, test each spouse. Age is measured at year end.
The enhanced senior deduction
This is a different deduction from the add-on, for tax years 2025 to 2028:
- Up to $6,000 per eligible person, or $12,000 on a joint return if both qualify
- You must be 65 or older by year end
- It phases down by 6% of modified AGI above $75,000 ($150,000 joint)
- The qualifying person's Social Security number must be on the return
- Married taxpayers must file jointly; married filing separately is ineligible
- You can claim it whether you itemise or not
Don't double-count it with the age add-on. They're separate lines.
Dependents
A dependent's standard deduction is the greater of $1,350 or earned income plus $450, capped at the basic amount for their filing status. Any age or blind add-on is on top.
Situations that restrict the deduction
- MFS with an itemising spouse: you can't take the standard deduction.
- Nonresident aliens: generally can't claim it. One exception covers certain students and apprentices under the US-India treaty, as long as they don't itemise.
- Dual-status returns: no standard deduction, though you may itemise.
- Living abroad: Publication 501 doesn't treat this alone as a disqualifier. A US citizen in Australia generally follows the same rules as one in the US.
There is no Australia-specific standard deduction amount, and the US-Australia treaty doesn't create one.
New charitable deduction for non-itemisers
From 2026, non-itemisers can deduct qualifying cash gifts of up to $1,000 ($2,000 joint) to eligible charities. Donor-advised fund contributions generally don't qualify. Keep receipts or bank records.
Standard Deduction vs. Itemised Deductions: Which Should You Choose?
You choose between the standard deduction and itemising on Schedule A. The main itemised categories are:
- Medical and dental costs above 7.5% of AGI
- State and local taxes, capped at $40,400 for 2026 ($20,200 MFS), phasing down for high earners but not below $10,000
- Mortgage interest on up to $750,000 of acquisition debt
- Charitable gifts, now subject to a 0.5% contribution-base floor
- Casualty and theft losses, where allowed
The decision formula
- Total your eligible itemised deductions.
- Work out your standard deduction, including any age or blind add-ons.
- Choose whichever is larger.
Don't compare your itemised total to the base amount alone. A 67-year-old single filer has $18,150 available, not $16,100, and that changes the answer.
When itemising tends to win
- High state taxes combined with a mortgage
- Large charitable giving
- Unusual medical bills
Itemising isn't automatically better, though. The IRS reported that for 2023, about 89.2% of individual returns used the standard deduction, per IRS Publication 4801.
You can switch methods each year, except that spouses who file separately must use the same method. Keep receipts, cancelled cheques and bank records. Retain US-source statements and convert foreign-currency amounts consistently when you file from Australia.
How to Claim the 2026 Standard Deduction and Avoid Common Mistakes
On the 2025 Form 1040, the standard deduction or itemised total goes on line 12e. The 2026 draft also shows line 12e. Check the final form and instructions before filing.
Where to find official guidance
- IRS Publication 501 for standard deduction and filing rules
- Rev. Proc. 2025-32 for the 2026 amounts
- Form 1040 instructions and the tax tables at irs.gov
- The Interactive Tax Assistant for filing status
Mistake checklist
- Using the wrong tax year's figures
- Choosing the wrong filing status
- Missing the age or blindness add-on
- Double-counting the senior deduction
- Treating a deduction like a credit
- Overlooking nonresident or dual-status rules
- Skipping the itemised comparison
Getting help
Australians with US returns often juggle foreign accounts, treaty positions and two tax calendars. VJM Global supports cross-border accounting and US individual return preparation (Form 1040 and 1040-NR) for clients in that position. This article is general information, not personalised tax advice.
Frequently Asked Questions
What is the IRS standard deduction for tax year 2026?
$16,100 for single and married filing separately, $24,150 for head of household, and $32,200 for married filing jointly and qualifying surviving spouses. It reduces taxable income.
What is the additional standard deduction for seniors (65+) in 2026?
It's $2,050 if unmarried, or $1,650 per person if married or a surviving spouse. The separate $6,000 senior deduction phases out above $75,000 ($150,000 joint) of modified AGI.
Where can I find the IRS tax tables?
On IRS.gov, in the Form 1040 instructions and Publication 1040. Publication 501 and Rev. Proc. 2025-32 cover the deduction rules and amounts.
What were the standard deduction amounts in prior years (2016-2020)?
Single: $6,300 (2016), $6,350 (2017), $12,000 (2018), $12,200 (2019), $12,400 (2020). Joint amounts were double. These are historical, not 2026 rules.
What are the biggest tax mistakes people make?
Wrong filing status or tax year, missed age or blind add-ons, confusing deductions with credits, and skipping the itemised comparison. Relying on non-official guidance is another.
