Eliminate Itemized Deductions

CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.

Billions of Dollars 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021–
Change in Revenues 42.1 77.1 80.3 84.3 89.1 188.8 268.2 280.4 296.2 311.5 372.9 1,718.0

Data source: Staff of the Joint Committee on Taxation.
This option would take effect in January 2021.

When preparing their income tax returns, taxpayers may choose either to take the standard deduction—which is a fixed dollar amount—or to itemize and deduct certain expenses, such as state and local taxes, mortgage interest, charitable contributions, and some medical expenses. Taxpayers benefit from itemizing when the value of their deductions exceeds the amount of the standard deduction.

This option would eliminate all itemized deductions.