Homeowners React to the Tax Law

October 8, 2019
taxes
More than 126 million Americans claimed took the standard tax deduction in 2018.

 

Homeownership in the United States is complicated. On the one hand, it has been inextricably linked with the American Dream. On the other hand, it has offered U.S. taxpayers a substantial deduction on their annual tax payments. The influence of the other hand fell off a cliff in the 2018 tax year. The number of 2018 tax year returns claiming the mortgage interest deduction plunged from nearly 30.1 million in tax year 2017 to around 11.5 million in 2018, a drop of 62%. By way of contrast, the number of returns filed claiming the standard deduction jumped. 

In 2017, nearly 98 million Americans took the standard deduction when they filed their tax returns, while in 2018 that number rose to more than 126 million, an increase of about 29%. Of nearly 140.5 million 2017 returns filed, 70% took the standard deduction. In 2018, 141.2 million tax returns were filed and 92% of filers claimed the standard deduction. The Internal Revenue Service (IRS) recently reported the data, which compares tax returns received in the first 30 weeks of both tax years. The IRS data represents approximately 95% of all individual filers, 87% of total adjusted gross income and 82% of total tax liability. 

The differences are likely the result of the increase in the standard deduction between 2017 and 2018 that was included in the 2017 tax reform bill. In 2017, the standard deduction ranged from $6,350 for a single or a married person filing separately to $9,350 for a head of household to $12,700 for a married couple filing jointly. In 2018, the standard deduction rose to $12,000 for single taxpayers, $18,000 for heads of households and $24,000 for married filers. 

Source: 24/7 Wall Street