Final answer:
The tax owed by a single individual using the standard deduction is calculated by subtracting the standard deduction from adjusted gross income to find the taxable income, on which the tax liability is then based. The graph referred to helps visualize this relationship and the effects of deductions on overall tax brackets and rates.
Step-by-step explanation:
When discussing the tax owed by a single individual in the United States taking the "standard deduction," it's crucial to understand how the tax system operates. The figure mentioned, with different axes for adjusted gross income and taxable income, represents the relationship between income levels and the corresponding tax liability. Adjusted gross income is the total income before any deductions are applied, while taxable income is what remains after the standard deduction or itemized deductions have been subtracted.
The standard deduction reduces a taxpayer's adjusted gross income, thereby lowering the taxable base, which leads to a reduction in the overall income tax owed. In terms of the graph, as the adjusted gross income increases along the horizontal axis in the upper panel, the tax owed would also rise according to the current tax rates. However, with the standard deduction applied, as illustrated in the lower panel, the starting point of taxable income is shifted to the right, potentially placing the taxpayer in a lower tax bracket.