2017 Impact of Tax Reform Options
[May 15, 2017] Impact of Tax Reform Options on Owner-occupied Housing Prepared for the National Association of REALTORS®
Mortgage Interest under Current Law
Under our projections, in 2018, 35.4 million households will claim itemized deductions for mortgage interest, and 13.6 million of them (or 38 percent) will have outstanding loans of between $100,000 and $200,000. Almost three-quarters of households with mortgage interest deductions have incomes between $50,000 and $200,000 (25.3 million).
Homeowners also are able to deduct state and local property taxes. In 2018, an estimated 40.7 million taxpayers will report itemized deductions for property taxes of $206 billion. The majority of these deductions, or 70 percent in 2018, are estimated to be claimed by taxpayers with adjusted gross income (AGI) between $50,000 and $200,000.
Description of Tax Reform Option
The tax reform option analyzed in this report is an illustrative comprehensive tax reform option that would lower and consolidate marginal tax rates to three rates with a top rate of 33 percent, double the standard deduction, eliminate all itemized deductions other than charitable contributions and mortgage interest, eliminate personal exemptions, eliminate the Alternative Minimum Tax, and cap the tax rate on pass-through business income at 25 percent. This option is similar to a number of comprehensive reform proposals that have been introduced in recent years.