Mortgage interest deductions fell by half following the passing of the Republican tax bill, according to a new government estimate.
On Friday, the Joint Committee on Taxation released its estimates of federal tax expenditures for fiscal year 2017. According to their estimates, $40.7 billion in mortgage interest deductions would be claimed in 2018, compared to $72.4 billion estimated the year before the tax bill's passing. In 2019, it's estimated to shrink to $33.9 billion.
According to CNBC, the drop can likely be attributed to the increased standard deduction, which took effect on January 1, though the GOP tax law did lower the mortgage deduction and other tax breaks to offset the lower tax rates and cuts.
But because of the increased standard deduction on federal, state and local taxes, far fewer people are expected to itemize their deductions, meaning they cannot receive a tax break for interest paid on a mortgage. In fact, deductions for state and local taxes will result in $24.5 billion in deductions in 2018, almost one third of the $74.1 billion projected before the law’s passing.
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