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Pew: Impact of Mortgage Interest Tax Deduction Varies Geographically

As debate continues to swirl around the future of the mortgage interest tax deduction, ""Pew Charitable Trusts"":http://www.pewtrusts.org/ released a ""study"":http://www.pewstates.org/uploadedFiles/PCS_Assets/2013/MID-report2.pdf revealing the geographic impact of the tax deduction. The concentration of claims varies widely by state but is highest on the East Coast and in parts of the West, according to the study. States with the lowest claim rates are generally located in the South.


With 37 percent of all filers claiming the mortgage interest tax deduction, Maryland had the highest claim rate in the country, according to data from 2010. The lowest claim rate occurred in West Virginia and North Dakota, where 15 percent of filers claimed the deduction.

Across the nation, about 25.5 percent of tax filers claimed the mortgage interest tax deduction in 2010, according to Pew.

The amount claimed per tax filer--across those who claimed the deduction and those who did not--was also highest in Maryland, $4,580.


The lowest claim-per-filer took place in North Dakota--$1,192.

Pew also noted differences in distribution of the mortgage interest tax deduction within states. Often, residents in large metropolitan areas were more likely to claim the deduction than residents in less populated or more rural areas.

Texas demonstrated the greatest variance in claim rates and deduction amounts in one state. Austin, Texas, held both the highest claim rate and the highest deduction amount, which were four times and six times higher than the lowest rates recorded in the state.

On the other hand, in Pennsylvania, the state's largest metro areas did not hold the highest concentration of claim rates. Pittsburgh ""had relatively low claim rates"" when compared to the less-populous York-Hanover area, according to the Pew study.

""Looking at who benefits by state should inform federal policymakers as they consider options for changing or eliminating tax expenditures over the next several years,"" said Anne Stauffer, a fiscal policy expert at Pew.

In 2011, mortgage interest tax deduction claims totaled about $360 billion.

Pew noted in its study that the housing crisis did impact the amount and number of claims made in recent years. In 2007, the deduction amount peaked at $543 billion. Over the following three years, the deduction amount declined 28 percent, and the number of claims declined 12 percent, according to Pew.


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