As the battle for tax reform continues in Washington, many people don\u2019t understand the impact of proposed changes to the standard deduction and itemized deductions. Based on the latest IRS averages listed below, which use data from 2014 tax returns, we can show you the averages of the itemized deduction and compare those averages between current tax law to the proposed changes in the Tax Cuts and Jobs Act.<\/p>\n
Table 1: 2014 Itemized Deductions Averages[1]<\/strong><\/a><\/strong><\/p>\n <\/p>\n Based on the IRS Statistics, approximately 30% of all tax returns filed have itemized deductions claimed. For the other 70% of tax returns that claim the standard deductions, those taxpayers will receive a 200% increase in the deduction under the Tax Cuts and Jobs Act. Table 2 below, shows what the average itemized deductions would look like under tax reform, along with the difference compared to current tax law, assuming the taxpayer\u2019s filing status is married, filing jointly.<\/p>\n \u00a0<\/strong><\/p>\n \u00a0<\/strong>Table 2: 2014 Itemized Deductions Averages Applied to Tax Cuts and Job Act<\/strong><\/p>\n <\/p>\n Under the Tax Cuts and Job Act, the following major changes have been proposed for itemized deductions:<\/p>\n 1.\u00a0 Only property taxes, mortgage interest, and charitable contributions are allowed; The standard deduction and itemized deductions are not a dollar for dollar decrease in tax. The taxpayer\u2019s tax bracket<\/a> also need to be taken into account to truly see the tax effect.<\/p>\n Each person\u2019s tax situation is unique. We suggest contacting one of our tax advisors should you have any questions regarding your specific tax situation.<\/p>\n\n\n
\n Adjusted Gross Income<\/td>\n Medical Expenses<\/td>\n Taxes<\/td>\n Interest<\/td>\n Charitable Contributions<\/td>\n Total Deductions<\/td>\n<\/tr>\n \n Under $15,000<\/td>\n $8,787<\/td>\n $3,566<\/td>\n $7,129<\/td>\n $1,427<\/td>\n $20,909<\/td>\n<\/tr>\n \n $15,000 to $30,000<\/td>\n $8,477<\/td>\n $3,376<\/td>\n $6,619<\/td>\n $2,339<\/td>\n $20,811<\/td>\n<\/tr>\n \n $30,000 to $50,000<\/td>\n $8,209<\/td>\n $4,098<\/td>\n $6,511<\/td>\n $2,594<\/td>\n $21,412<\/td>\n<\/tr>\n \n $50,000to $100,000<\/td>\n $9,614<\/td>\n $6,679<\/td>\n $7,553<\/td>\n $3,147<\/td>\n $26,993<\/td>\n<\/tr>\n \n $100,000 to $200,000<\/td>\n $11,122<\/td>\n $10,983<\/td>\n $9,147<\/td>\n $4,130<\/td>\n $35,382<\/td>\n<\/tr>\n \n $200,000 to $250,000<\/td>\n $18,092<\/td>\n $17,763<\/td>\n $11,642<\/td>\n $5,786<\/td>\n $53,283<\/td>\n<\/tr>\n \n $250,000 or more<\/td>\n $36,992<\/td>\n $50,679<\/td>\n $16,982<\/td>\n $21,596<\/td>\n $126,249<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \n\n
\n Adjusted Gross Income<\/td>\n Real Estate Taxes<\/td>\n Mortgage Interest<\/td>\n Charitable Contrib.<\/td>\n Total Deductions<\/td>\n Standard Deduction or Itemized Deductions<\/td>\n Increase\/ (Decrease) in Deduction<\/td>\n<\/tr>\n \n Under $15,000<\/td>\n $1,248<\/td>\n $6,630<\/td>\n $1,427<\/td>\n $9,305<\/td>\n $24,000<\/td>\n $3,091<\/td>\n<\/tr>\n \n $15,000 to $30,000<\/td>\n $1,182<\/td>\n $6,156<\/td>\n $2,339<\/td>\n $9,677<\/td>\n $24,000<\/td>\n $3,189<\/td>\n<\/tr>\n \n $30,000 to $50,000<\/td>\n $1,434<\/td>\n $6,055<\/td>\n $2,594<\/td>\n $10,083<\/td>\n $24,000<\/td>\n $2,588<\/td>\n<\/tr>\n \n $50,000to $100,000<\/td>\n $2,338<\/td>\n $7,024<\/td>\n $3,147<\/td>\n $12,509<\/td>\n $24,000<\/td>\n $(2,993)<\/td>\n<\/tr>\n \n $100,000 to $200,000<\/td>\n $3,844<\/td>\n $8,507<\/td>\n $4,130<\/td>\n $16,481<\/td>\n $24,000<\/td>\n $(11,382)<\/td>\n<\/tr>\n \n $200,000 to $250,000<\/td>\n $6,217<\/td>\n $10,827<\/td>\n $5,786<\/td>\n $22,830<\/td>\n $24,000<\/td>\n $(29,283)<\/td>\n<\/tr>\n \n $250,000 or more<\/td>\n $10,000<\/td>\n $15,793<\/td>\n $21,596<\/td>\n $47,389<\/td>\n $47,389<\/td>\n $(78,860)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\n2. Property taxes are limited to $10,000; and
\n3. Mortgage interest is limited to the taxpayer’s primary residence, up to $500,000 balance.<\/p>\n