Brief Reforming the Mortgage Interest Deduction
Eric Toder, Margery Austin Turner, Katherine Lim, Liza Getsinger
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The mortgage interest deduction (MID) is the largest single federal subsidy for owner-occupied housing, but the benefits are not evenly distributed among taxpayers. Only individuals who itemize deductions can benefit from the MID, and the value of the deduction increases with the marginal tax rate. If the government wishes to promote homeownership, a refundable tax credit available to all taxpayers would be more effective. This report presents new distributional estimates both of the current deduction's benefits by income group, family type, and race/ethnicity and of proposals to eliminate, scale back, or replace the MID with more broad-based tax incentives.
Research Areas Economic mobility and inequality Taxes and budgets Housing
Tags Federal housing programs and policies Federal budget and economy Income and wealth distribution
Policy Centers Metropolitan Housing and Communities Policy Center