01/03/2023
You may be curious to know what benefit is derived from a tax deduction. For most non-business deductions, the savings are based upon your tax bracket. For example, if you are in the 24% tax bracket, a $1,000 deduction would save you $240 in taxes. That is not the end of the story, as some deductions are eliminated or reduced due to income thresholds and phaseouts, while business deductions provide additional benefits.
Individuals are always looking for tax deductions that can reduce their tax liability. But what is the actual tax benefit derived from a tax deduction? There is no straightforward answer because some deductions are “above the line”, others must be itemized, some must exceed a threshold amount be...