Reason Foundation

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Reason Foundation

Unmasking the Mortgage Interest Deduction - Update 2012

Who Benefits and By How Much?

Anthony Randazzo and Dean Stansel
December 12, 2012

The federal income tax code is riddled with loopholes, deductions and credits designed to promote various social goals and benefit assorted groups of Americans. One of the largest of these is the mortgage interest deduction (MID), which allowed taxpayers to claim benefits of $82.7 billion in 2010, the latest data available. Given the number of recent proposals to change the MID in some way, it is helpful to review which households are claiming the mortgage interest deduction.

In a new policy summary, Reason Foundation offers a update to the 2011 study "Unmasking the Mortgage Interest Deducton" and takes a look at who is currently benefiting from the MID.

Joint Committee on Taxation data shows households making $100,000 or more a year constitute 55 percent of those claiming the MID, and they receive 78 percent of the deduction’s total benefits. The last two columns of our table of the JCT data show the average tax savings that households in each income group receive from the MID, and what those savings represent in monthly savings. For example, the MID saves middle-class households making between $40,000 and $75,000 a year around $80 a month. The MID is not the middle-class savior it is made out to be.


Anthony Randazzo is Director of Economic Research

Dean Stansel is Adjunct Fellow

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