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angrus123
New Member

Why, when I entered my 10,000 maximum property tax deduction, it only reduced my taxes by 3% and I'm in a much higher tax bracket. Why is this?

 
1 Reply
SweetieJean
Level 15

Why, when I entered my 10,000 maximum property tax deduction, it only reduced my taxes by 3% and I'm in a much higher tax bracket. Why is this?

It is only beneficial to the extent that exceeds your Standard deduction (which TT has already given you).

Example:

Standard Deduction $24,000 MFJ

Itemized Deductions before Property Tax  = $15,000

add $10,000 Property Tax  = $25,000 total itemizeds

So the addnl income deduction is only $1,000.  Tax saving is your marginal rate on that $1,000.


Also be aware that the $10,000 cap applies to the total of State/Local/Sales and Property Taxes.  So, if you already have a State income or Sales tax deduction, only some of the Property taxes will count.

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