The Tax Policy Center updated their figures today for how different tax deductions and exemptions are projected to favor different income groups in 2015.
In order to take a deduction, you must itemize your taxes. While itemizing makes financial sense for high-income Americans, it does not for low ones. This means that deductions are mostly utilized by the rich.
For instance, more than two thirds of the deductions for mortgage interest, charitable contributions and state and local taxes accrue to the top quintile of earners. The mortgage interest deduction for the top 1% averages $6,507. For the deduction for charitable contributions deductions, it's $17,433. For the top 0.1%, their charitable deduction averages almost $100,000.
Here's who receive the benefits of those deductions:
Tax credits, on the other hand, have different requirements. The child tax credit is available to everyone while the earned income tax credit (EITC) is targeted to low-income Americans, particularly those with kids.
The EITC alone halves the average federal tax rate for Americans in the bottom 20%. The top 40% of earners receive almost nothing from the credit. Everyone takes similar advantage of the child tax credit, but it has a larger impact on low-income Americans since it represents a larger share of their tax payments. While the child tax credit only reduces the average federal tax rate of the top quintile by 1.5%, it cuts more than 25% off the average rate for the lowest quintile.
Here are who benefits from those two credits:
Tax Policy Center