As tax filing season comes to a close, now is a good time to take a look at some of the basic facts concerning the deduction for property taxes paid on an owner-occupied home. As homeowners past and present know, this deduction helps offset the cost of homeownership. A few facts about the deduction from 2010 data:
- The property tax deduction benefitted 32.9 million homeowning households for a total savings of $23 billion
- Almost 80% of the tax benefit was collected by households earning less than $200,000 in economic income
- Household income is the sum of all income earned by individuals filing on the same tax form; economic income includes items like employer-paid payroll tax and health insurance
- For households earning between $100,000 and $200,000, the average tax savings was more than $800.
This deduction has become just that much more important in recent years, as home prices have plunged while property tax payments have remained about the same, leading to higher effective tax rates on homeowners.
House Resolution 557, sponsored by U.S. Representative Pascrell of New Jersey, expresses support for this important homeownership tax rule.
Click here for a look at the mortgage interest deduction.