The benefit of the deduction increases with the size of the mortgage: the bigger the mortgage, the greater the tax benefit.
More specifically, the resulting model (Table 5) implies an increase of diagnostic accuracy by 1.37 if PES-format is present, a decrease of.025 if age increases by one year, an increase by.13 if deduction increases by one scale point, and an increase by.14 if analysis increases by one point.
(Married taxpayers 65 and older already get an additional $1,050 per person standard deduction just for being old; singles get $1,350. So older homeowners would see their standard deduction increase to $14,000 for a couple or $7,300 for a single for 2008).
This stands to reason, because those with incomes below $30,000 are largely exempt from federal income taxes; the value of all deductions increases the higher one's tax bracket; tax rates rise with income; and the wealthy are more likely to be homeowners.
While home mortgage interest is (by and large) not specifically targeted by the AMT, having a lot of interest deductions increases the chance that you will get thrown into AMT territory.
As part of the new health care law, the floor for medical deductions increases from 7.5percentt of AGI to 10percentt for those taxpayers under age 65 starting in 2013.
Republicans, wary of being put on the defensive and positioning to avert blame should the committee fail, proposed this week to raise what they said was nearly $500 billion in new revenues over 10 years by limiting tax deductions, increasing Medicare premiums and counting on economic growth to bring in more income taxes.
To pay for his plans and get the deficit down to manageable levels, he would return top tax rates to where they were before George Bush cut them, extract more from the rich by capping their deductions, increase taxes on corporations and auction carbon-emission permits.
The standard deduction also increases $100 to $6,300 for single filers.
Because the standard deduction has increased, many people will not have enough deductions, even with a mortgage, to itemize deductions.
It would scrap the federal income tax deduction and increase exemptions for dependent children.
