Looking to reduce your tax bill?
From student loan and mortgage interest to medical and home office expenses, there are a number of different tax deductions, or write-offs, that taxpayers can claim to reduce the income they’re taxed on.
When it comes to deductions, taxpayers can choose from either a standardized deduction or an itemized deduction. Whether it’s charitable contributions, state and local taxes, or homeownership expenses, millions of taxpayers opt for the itemized deduction to maximize their tax write-offs.
But where are tax write-offs the most common?
We conducted an analysis of tax return data from all 50 states as well as the District of Columbia to determine where Americans are writing off the most in taxes.
Key findings:
- Nationwide, Americans claim a total of $658.1 billion in itemized tax deductions, which is an average of $44,190.55 per deduction.
- Tax write-offs are the most common in the D.C. area, with Maryland, Washington, D.C., and Virginia securing three spots within the top five rankings. Taxpayers in this area collectively claim more than $44.4 billion in write-offs, according to IRS data.
- California ranks 3rd, with taxpayers claiming an average of $44,722.40 in itemized deductions.
- States claiming the fewest itemized deductions: West Virginia (#1), South Dakota (#2), North Dakota (#3), Indiana (#4), and Ohio (#5).
Where are tax write-offs the most common?
When it comes to standardized deduction or an itemized deduction, it’s crucial to understand which option will benefit you the most before filing your tax return.
For the 2023 tax season, the limit for a standard deduction is $27,700 for married couples filing a joint return, according to the IRS. For those who are married filing separately or for single filers, the limit is $13,850.
So, which option is better? Among taxpayers who itemized their deductions, the average nationwide deduction is $44,190.55, but it all comes down to which type of deduction will result in greater savings on your tax return.
If you’re willing to do the extra legwork, itemizing your deductions could result in greater savings. Nowhere else in the country do more taxpayers itemize their deductions than in the D.C. area or the DMV (D.C., Maryland, Virginia) region.
In both Maryland and D.C., one in five filed their taxes with itemized deductions. The average write-off amount for Maryland is $33,772.44, while the average amount for D.C. is $39,404.93, according to the IRS. D.C. also ranks 5th for the largest average charitable deduction, totaling $6,612.
Six out of the top 10 states where write-offs are the most common are located in the Northeast, including Maryland, D.C., Virginia, New Jersey, Massachusetts, and Connecticut. Elsewhere, California, Utah, Oregon, and Hawaii round out the top 10.
Top 10 states with the most tax write-offs
#1. Maryland
- Total tax returns: 3,050,240
- Tax returns with write-offs: 613,410
- Average write-off amount: $33,772.44
- Write-offs as percent of income: 6.9%
- Percent of tax returns with write-offs: 20.1%
#2. District of Columbia
- Total tax returns: 346,130
- Tax returns with write-offs: 69,200
- Average write-off amount: $39,404.93
- Write-offs as percent of income: 5.9%
- Percent of tax returns with write-offs: 20.0%
#3. California
- Total tax returns: 18,826,760
- Tax returns with write-offs: 2,812,890
- Average write-off amount: $44,722.40
- Write-offs as percent of income: 5.9%
- Percent of tax returns with write-offs: 14.9%
#4. Virginia
- Total tax returns: 4,120,940
- Tax returns with write-offs: 567,330
- Average write-off amount: $36,961.68
- Write-offs as percent of income: 5.2%
- Percent of tax returns with write-offs: 13.8%
#5. New Jersey
- Total tax returns: 4,576,270
- Tax returns with write-offs: 621,950
- Average write-off amount: $38,703.12
- Write-offs as percent of income: 4.8%
- Percent of tax returns with write-offs: 13.6%
#6. Utah
- Total tax returns: 1,487,070
- Tax returns with write-offs: 199,770
- Average write-off amount: $46,489.33
- Write-offs as percent of income: 6.5%
- Percent of tax returns with write-offs: 13.4%
#7. Massachusetts
- Total tax returns: 3,551,710
- Tax returns with write-offs: 429,950
- Average write-off amount: $46,841.71
- Write-offs as percent of income: 4.4%
- Percent of tax returns with write-offs: 12.1%
#8. Oregon
- Total tax returns: 2,048,450
- Tax returns with write-offs: 247,790
- Average write-off amount: $38,030.71
- Write-offs as percent of income: 5.2%
- Percent of tax returns with write-offs: 12.1%
#9. Hawaii
- Total tax returns: 693,580
- Tax returns with write-offs: 81,290
- Average write-off amount: $34,808.12
- Write-offs as percent of income: 5.0%
- Percent of tax returns with write-offs: 11.7%
#10. Connecticut
- Total tax returns: 1,821,090
- Tax returns with write-offs: 211,880
- Average write-off amount: $46,260.76
- Write-offs as percent of income: 4.3%
- Percent of tax returns with write-offs: 11.6%
Charitable deductions by state
One of the most common types of tax write-offs are charitable contributions, and no other state write-offs more to charity than Wyoming. The average charitable deduction for Wyoming taxpayers is $14,627, which is more than three times higher than the nationwide average ($4,654). Arkansas ranks 2nd with an average charitable deduction of $12,934, followed by Utah ($8,080), New York ($6,690), and D.C. ($6,612).
States with the lowest average charitable deductions include West Virginia ($2,029), Rhode Island ($2,191), Hawaii ($2,367), Kentucky ($2,505), and Maine ($2,535).
Even though New Jersey ranks low in terms of the average charitable deduction ($3,284), the state takes the top spot for the percentage of residents who give to charity. Overall, 46.8% of tax returns in New Jersey had charitable contributions. Nationwide, more than one-third (37.6%) of taxpayers made charitable contributions, according to tax return data. West Virginia ranks last on the list, with only one-quarter of taxpayers making charitable contributions, according to the IRS.
Whether you’re filing your taxes with a tax professional or on your own, make sure you’re getting the most out of your deductions.
If you’re not sure which option is the best, you can always itemize your deductions first and then compare that amount to the standard deduction based on your filing status to ensure the biggest refund possible.
Methodology
In order to determine our ranking, we analyzed tax return data from the Internal Revenue Service for the year 2021, which represents the most recent data available. Our analysis involved calculating the percentage of tax returns with itemized deductions across all 50 states as well as the District of Columbia. Additionally, we calculated the average itemized deduction as well as the percentage of each state’s total reported income that was claimed as deductions. For charitable contributions, we analyzed both standardized and itemized deductions. Our analysis calculated the percentage of tax returns claiming charitable contributions, the average charitable deduction as well as the percentage of each state's total reported income that was allocated toward charitable contributions.
Sources: Internal Revenue Service, U.S. Census Bureau American Community Survey 2022, Tax Foundation, Tax Policy Center
Fair Use: Feel free to use this data and research with proper attribution linking to this study.
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