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Higher Income Taxpayers Are Most Likely to Claim Itemized Deductions

1 min readBy: Andrew Lundeen, Scott Hodge

When filling out their taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. returns, taxpayers can chose between claiming a standard deductionThe standard deduction reduces a taxpayer’s taxable income by a set amount determined by the government. It was nearly doubled for all classes of filers by the 2017 Tax Cuts and Jobs Act (TCJA) as an incentive for taxpayers not to itemize deductions when filing their federal income taxes. (which in 2013 was $6,100 for a single filer and $12,200 for married couples) or itemizing their deductions—whichever is larger. The value of deductions depend on the top rate a taxpayer pays at. For example, a $1,000 deduction is worth $150 for someone in the 15 percent bracket, but worth $396 for someone in the top 39.6 percent bracket.

The percentage of tax filers who itemize increases as we move up the income scale. Only about half of taxpayers earning between $50,000 and $75,000 claim itemized deductionItemized deductions allow individuals to subtract designated expenses from their taxable income and can be claimed in lieu of the standard deduction. Itemized deductions include those for state and local taxes, charitable contributions, and mortgage interest. An estimated 13.7 percent of filers itemized in 2019, most being high-income taxpayers. s, but nearly 100 percent of taxpayers earning above $200,000 itemize.

For more charts like the one below, see the second edition of our chart book, Putting a Face on America's Tax Returns.