Who gets what with the Mortgage Interest Deduction

Inquiring minds are viewing an interactive map produced by the Tax Foundation and reading their findings. Please click here to the NYTimes article on “Mapping the Mortgage Interest Deduction”.

One quote to whet your appetite:

But taxpayers in California benefited the most from taking advantage of the deduction. Californians who deducted mortgage interest saved an average of $18,876, several thousand dollars more than the typical Maryland homeowner who deducted mortgage interest on the 2008 federal income tax return.

So what accounts for the difference? A direct quote from the report:

The large monthly mortgage payments that result are, with frequent refinancing, mostly interest payments, not payments on principal. This maximizes the amount deducted, and since these same high-income people are thrust into a higher marginal tax bracket by the federal income tax’s progressive rate structure, the deduction saves them substantially more.


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