The Effects of the 2017 Tax Act on Itemized Deductions

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Presentation transcript:

The Effects of the 2017 Tax Act on Itemized Deductions Ed Harris Congressional Budget Office This presentation has not been subject to CBO’s regular review and editing process. The views expressed here should not be interpreted as CBO’s.

Major Provisions Affecting Itemized Deductions Amount of the standard deduction is (roughly) doubled New limits on specific deductions State and Local Taxes limited to $10,000 Mortgage interest limited to $750,000 of indebtedness for new mortgages, new limits on home equity loans Elimination of several smaller deductions Some expansions of existing deductions Repeal of the Pease limit Income limit on charitable contributions increased Lower statutory rates All provisions expire at the end of 2025

The 2017 Act Reduces The Tax Preference For Itemized Deductions Total Tax Subsidy for Deductions 2017 2018 YoY Percent Change Returns Itemizing (M) 49 18 -64 Itemized Deductions (B) 1,401 869 -38 Tax Value of Deductions (B) 190 61 -68 Marginal Subsidy Rate on Deductions (Percent) 2017 2018 YoY Change State and Local Taxes 14 1 -13 Mortgage Interest 19 11 -8 Charitable Contributions 22 17 -5