Standard Deduction Changes Affecting Small-Business Tax Filers

The IRS adjusts the standard deduction each year for inflation. For the 2024 tax year (returns filed in 2025), the standard deduction has increased for most filers, including those who are married filing jointly, heads of household, and single filers. Additional amounts for taxpayers who are blind or age 65 or older have also risen. While these changes are straightforward, they can affect how business owners estimate quarterly payments, handle employee withholding, and plan their year-end tax strategy in QuickBooks.

Who Is Affected

• Single filers and married individuals filing separately now receive a standard deduction of $14,600 (up $750 from 2023).
• Married couples filing jointly see the deduction rise to $29,200 (up $1,500).
• Heads of household get $21,900 (up $1,100).
• Taxpayers who are blind or age 65+ can take an additional $1,550 (or $1,950 if unmarried and not a surviving spouse). These amounts are separate from the base standard deduction.

Small-business owners who operate as sole proprietors or single-member LLCs and use QuickBooks to track income and expenses will see their taxable income effectively reduced by the higher standard deduction if they do not itemize. This can change the bottom-line tax liability and influence decisions about retirement contributions or equipment purchases.

Practical Steps in QuickBooks

1. Review your deduction method – In QuickBooks Desktop or Online, run a Profit & Loss report for 2024 to estimate taxable income. Compare itemized deductions (mortgage interest, state taxes, charitable gifts) against the new standard deduction. If itemized amounts fall below the standard, adjust your tax payments accordingly.

2. Update payroll withholding – If you pay yourself via payroll in QuickBooks, use the new standard deduction tables to fine-tune federal withholding for the remainder of the tax year. This prevents over‑ or under‑withholding.

3. Plan estimated payments – For sole proprietors, the higher standard deduction means a lower effective tax rate on the first dollars of business profit. Recalculate your quarterly estimated tax payments inside QuickBooks to avoid overpaying and tying up cash.

4. Inform eligible employees – If your business has employees who are blind or age 65+, their additional standard deduction amount may have changed. Advise them to review their W-4 using updated IRS tables.

What Not to Do

Do not assume the standard deduction applies to every entity. C‑corporations and multi‑member LLCs taxed as partnerships do not use the standard deduction. Also, the standard deduction cannot be claimed by a taxpayer who is married filing separately if the spouse itemizes. These rules remain unchanged.

For a deeper look at how filing status and dependency affect deductions, our QuickBooks Users community has detailed examples. If you need to adjust prior-year estimates or correct a tax filing, your accountant can guide you through the specific steps.