The Average Itemized Deduction for Mortgages

Mortgage interest can help you save on your taxes

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The itemized tax deduction for mortgage interest is a long-standing tax benefit in the United States. According to Pew Charitable Trusts' 2010 analysis, the average itemized deduction for mortgage interest in the U.S. is $2,713 among all filers. The average deduction increases to $10,640 among tax filers who claim a deduction. Less than one-third of federal tax payers, and less than one-half of all homeowners, take advantage of a deduction for their mortgage interest.

Higher Priced States

California and Maryland are the two states with the highest value for mortgage tax deductions. According to Pew Charitable Trusts, the average mortgage deduction in Maryland is $4,580 when divided among all tax filers, while the average in California was $4,311 per filer. When calculated only among people who claimed the deduction, California has the highest average deduction at $15,755.

Lower Priced States

The average changes considerably in states with lower home prices. North Dakota has the fewest claims for mortgage interest tax deductions, and the resulting lowest average mortgage interest deduction among filers, at $1,192 per filer. The lowest average deduction among people who claim the mortgage interest deduction is in Iowa, with an average of $7,177.

The True Benefit

Although the mortgage interest tax deduction by itself sounds like free money, your true benefit may vary depending on several factors. The amount that you actually save on your taxes depends on your marginal income tax rate. If you are in the 15 percent tax bracket, and you deduct $10,000 in mortgage interest, the most that you will save on your taxes is $1,500, or 15 percent of the deduction amount. If you are in a higher tax bracket, you will save more as your income is taxed at the higher rate.

Mortgage Interest and the Standard Deduction

You may not save as much with the itemized deduction for mortgage interest as it would appear. The reason for this is that you are able to claim a certain amount as a standard deduction even if you do not have a mortgage. As of 2013, the standard deduction allowable is $12,200 for a married couple. If you are married and have mortgage interest of $9,000, and $2,000 in other itemized deductions, you have saved nothing with your mortgage interest deduction, because you will get a higher deduction by claiming the standard deduction.