What happens to taxable income when you claim the standard deduction?

Claiming the standard deduction reduces taxable income, which means that the amount of income subject to income tax decreases. The standard deduction is a fixed dollar amount that taxpayers can deduct from their income, thereby lowering their taxable income and potentially reducing their overall tax liability. This deduction is available to most taxpayers who do not itemize deductions and can help simplify the tax filing process.

For many taxpayers, taking the standard deduction results in a lower taxable income compared to not claiming it, as it effectively reduces the income that is taxed. For example, if a taxpayer has a gross income of $50,000 and claims a standard deduction of $12,400 (for the tax year 2020), their taxable income becomes $37,600. This reduction is significant as it directly affects the amount of taxes owed.