Crashes and the rules they brought · 1929–1950s
1944
The standard deduction
Taxpayers can take a set deduction instead of listing every expense.
With far more people paying income tax during World War II, the Individual Income Tax Act of 1944 introduced the standard deduction, so most filers didn't need to itemize.
💡 Why it made sense then
Millions of new taxpayers needed a simple way to file.
Ideas it gave us
- 🧮 Standard deduction
The standard deduction is a fixed amount of income that isn't taxed at all. Taxpayers take it or itemise their deductions, whichever is larger.
Practise with $10,000 in play money
Free. No real money involved.