Zero-Bracket Amount

Until the Tax Reform Act of 1986, the Standard Deduction that is, the income automatically not subject to federal income tax for taxpayers choosing not to itemize deductions. The zero-bracket amount was built into the tax tables and schedules used to compute tax. The 1986 Act replaced the zero-bracket amount with an increased standard deduction, which was subtracted from income before computing taxes rather than being part of the rate tables. Current (see Revenue Reconciliation Act of 1993) law indexes the standard deduction to inflation and contains special provisions for the blind and elderly.

Type of Standard (or blanket) Deduction from Adjusted Gross Income (AGI) available to taxpayers, whether or not they can itemize nonbusiness expenses in the process of calculating their taxable income. This is the term used prior to the new tax laws.