Mortgage deduction rates vary widely, study finds
The mortgage interest deduction, widely viewed as a tax break for a broad slice of middle-class America, benefits the residents of some states far more than others, according to a new report by the Pew Charitable Trusts.
The number of filers who take the deduction, and the amounts they claim, vary widely. The percentage of tax filers deducting mortgage interest in 2010 ranged from a high of nearly 37 percent in Maryland to a low of 15 percent in West Virginia and North Dakota, according to Pew's report, The Geographic Distribution of the Mortgage Interest Deduction.
The amount of the tax break ranged from a high of $4,580 per filer in Maryland to a low of $1,192 in North Dakota, the report said. The national average was $2,713.
Nationwide, less than one-half of homeowners claim the deduction, which generally allows tax filers who own a home and itemize their deductions to subtract interest paid on mortgage debt from their gross income.
The report occurs as Congress considers an overhaul of the tax code to balance the budget. Tax filers deducted nearly $360 billion in mortgage interest in 2010 at a cost of roughly $72 billion in federal income tax revenue, Pew said.
“Looking at who benefits by state should inform federal policymakers as they consider options for changing or eliminating tax expenditures over the next several years,” Pew's Anne Stauffer, an expert on federal and state fiscal policy, said in a statement.
Tax filers in and around larger metropolitan areas, where property values and incomes tend to be higher, generally claimed the mortgage interest deduction at higher rates than filers in less-populous areas. However, Pew found that factors other than property values and income, such as housing turnover, were major contributors to the disparities nationwide.
States with the highest claim rates were concentrated along the East Coast and in parts of the West; those with the lowest claim rates were mostly in the South, particularly in the band from Texas to Mississippi and stretching up to West Virginia, the report said.
California had the most tax filers in the country in 2010, at 16.7 million, as well as the highest number of claims, at 4.6 million. New York, Florida, and Texas — all top five states in terms of the number of tax filers — were at the top of the list or total deductions in dollars claimed, Pew said.
By contrast, among the 10 states with the greatest number of tax filers, Ohio, Michigan, and Georgia did not make the top-10 list of states with the largest amount of dollars claimed, Pew said. Virginia, Maryland and Washington state, all with lower numbers of filers, took their place in the top-10 list for dollars claimed under the mortgage interest deduction.
The variation across metropolitan areas within states is even greater. In Texas, for example, the state's highest claim rate — in the Austin area — is four times larger than the lowest rate, in the Odessa area, according to the report.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Visual search still hampered by image issues
- States clear way for startups to use crowdfunding
- Deported migrants find home at call centers
- U-PARC houses companies ranging from innovative to traditional
- Customers anxious for details about Highmark transition plan for W. Pa.
- Lower your cable bill by streaming shows
- Students walk shop class path to excellence
- Compelling cases exist for cashing out, staying in as stock market soars
- Government approves compromise on Corbett’s alternative Medicaid plan
- Gas drilling company withdraws application for forced pooling in Western Pennsylvania
- Hershey unwraps new corporate logo