Email FacebookTwitterMenu burgerClose thin

Where Americans Write Off the Most in Taxes – 2023 Study

2023 SmartAsset Study: Where Americans Write Off the Most in Taxes

With the April 18 tax deadline looming, Americans must choose between itemizing deductions or taking the standard deduction to reduce their tax obligations and pocket as much money as possible. Since the standard deduction was nearly doubled in 2018 as a result of the Tax Cuts and Jobs Act — also known as the Trump tax cuts — millions of taxpayers have been incentivized to stop itemizing. But for many, itemizing still makes sense.

When taxpayers have enough potential write offs, such as for qualified medical expenses, homeownership costs and dependent care, itemizing may be the path to greater tax savings. To see where Americans are writing off the most in taxes, SmartAsset examined tax return data for all 50 states and the District of Columbia.

Key Findings

  • The DMV ranks at the top of our list. Itemizing is popular in the greater Washington D.C. area, also known as the DMV (DC/Maryland/Virginia). While the nation’s capital ranks No. 1 overall in our study, Maryland and Virginia also make the top 10.
  • Washington state and Nevada are doubling down on tax savings. Both states make the top 10 states where Americans write off taxes, but the savings don’t stop there. Washington and Nevada are two of nine states that don’t charge income tax.
  • Coastal states crowd the top of the rankings. The East and West coasts are well represented near the top of our rankings. Coastal states, plus Washington D.C., account for 11 of the 15 places where people write off the most in taxes.
  • Itemizers deduct nearly $39,000 on average. Filers who itemize end up deducting an average of $38,746 per year across the 50 states and the District of Columbia. Those deductions represent 4.76% of total income reported in the U.S.

1. District of Columbia

Just over one in five tax returns filed in Washington D.C. use itemized deductions, second-most in our study. Those itemized deductions are equal to 7.51% of all income reported in the city. Additionally, the nation’s capital has the 11th-highest average itemized dedication across our study, at $42,359.

2. Utah

In Utah, 13.77% of all tax returns opt for itemized deductions — more than 45 other states. The average itemized deduction in Utah is worth $44,091, the seventh-most across our study. Meanwhile, the itemized deductions are worth 7.53% of the total income reported in the state, second only to Maryland.

3. California

The Golden State has the third highest percentage of tax returns with itemized deductions, with over 15% of Californians itemizing. Those write-offs are equal to 6.68% of all the income reported in the state, the fourth-highest percentage in our study. The average itemized deduction in California is just north of $41,000.

4. Washington

Those who itemize their deductions in Washington state receive an average write-off of $42,859, the ninth-most across our study. The sum of all itemized deductions in the Evergreen State is equal to 5.10% of the total income reported there (11th-highest). Meanwhile, Washington has the 12th-highest percentage of tax returns with itemized deductions (11.74%), despite the lack of state income taxes.

5. Massachusetts

Massachusetts, one of several high-tax states in the top 10, has the seventh-highest percentage of tax returns with itemized deductions (12.89%). The sum of all itemized deductions is equal to 4.70% of all income reported in the Bay State, which is 14th-most across our study.

6. Connecticut

Connecticut has the ninth-highest percentage (12.44%) of tax returns with itemized deductions in the nation. While the average itemized deduction in Connecticut is worth $38,992, total itemized deductions are equal to 4.63% of total income reported there.

7. Maryland

Neighboring D.C., Maryland has the highest percentage tax returns with itemized deductions at 21.08% – more than double the national average. Those deductions, meanwhile, are worth 7.64% of the total income reported in the state, more than any other place in the country. The average deduction is little lower than the rest of the top 10 at just over $31,000, sparing it from a place in the top 5.

8. Virginia

Virginians are particularly avid itemizers, with 14.77% of all tax returns use itemized deductions – that’s more than all but two states and Washington D.C. The value of all itemized deductions in Virginia is worth 5.85% of the total income reported in the state, which is good for the sixth-highest across our study.

9. Nevada (tie)

Like Washington state, Nevada has no state income tax. But that hasn’t dissuaded some tax filers from itemizing their deductions: 8.30% of tax returns use itemized deductions. Meanwhile, the average deduction in the Silver State is worth $48,218 – the fourth-most across our study.

9. New York (tie)

The Empire State ranks in the top 15 for all three metrics we used in our comparison. 10.27% of taxpayers itemize their deductions for an average deduction of $40,174. Deductions add up to 4.65% of the total income reported in the state (15th-most).

Should You Itemize Your Deductions?

Deciding between itemizing or taking the standard deduction comes down to some simple math and your filing status.

For the 2022 tax year, the standard deduction is $12,950 for single filers, $25,900 for joint filers and $19,400 for heads of households. If your allowable itemized deductions add up to more than the standard deduction in a given year, you’ll want to itemize. The IRS allows itemizers to deduct a variety of expenses from their taxable income, including:

  • State and local taxes
  • Medical and dental expenses
  • Property taxes
  • Mortgage interest
  • Charitable donations

“If you think you're a candidate for itemizing – say, because you donate a significant amount to charity each year – make sure you collect relevant receipts and records,” says Susannah Snider, a certified financial planner and managing editor of financial education at SmartAsset. “Also, consider working with a financial advisor and tax professional to ensure you're approaching your tax return correctly.

Data and Methodology

To find the places where taxpayers itemize deductions the most, SmartAsset compared 50 states and the District of Columbia across the following three metrics:

  • Itemized deductions as a percentage of income.
  • Percentage of tax returns with itemized deductions.
  • Average itemized deduction amount.

Data for all metrics comes from the IRS and is for 2020, the most recent data available. The data for average itemized deductions is likely skewed and a median would be more representative for most people but we couldn't derive it due to available data.

We ranked each state in every metric, giving an equal weighting to all three metrics. We then found each state’s average ranking. The state with the best average ranking places first in our study while the state with the lowest average ranking places last.

Tips for Tax Season

  • Work with an expert. Need help managing your tax liability or using investment losses to offset capital gains? A financial advisor can help. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Consider adjusting your withholdings. If you receive a large tax refund each year, you may be paying too much in taxes in the first place. If that’s the case, consider adjusting the withholding amounts on your W-4 so you can keep more money throughout the course of the year. Sure, a big refund is nice, but that money could be earning you interest throughout the year.

Photo credit: © Khirisutchalual