Top tax breaks for individuals

AP News
Posted: Jan 10, 2013 2:52 AM

U.S. tax law is filled with so many credits, deductions and exemptions that Americans will be able to reduce their tax bills by about $1.1 trillion this year, according to congressional estimates.

The biggest tax breaks, and the amount they will save taxpayers this year:


—Employer contributions toward workers' medical insurance premiums and medical care are not taxed: $181 billion.

—Retirement plan contributions and earnings are not taxed: $165 billion.

—Mortgage interest deduction: $101 billion.

—Lower tax rates on long-term capital gains and qualified dividends: $84 billion.

—Deduction for state and local taxes: $69 billion.

—Deduction for charitable contributions: $46 billion.

—Most Social Security and veterans' benefits are not taxed: $45 billion.

—Interest on tax-exempt state and local government bonds is not taxed: $26 billion.

—When someone dies, the capital gains on his investments is not taxed: $24 billion.

—Income from some life insurance products is not taxed: $23 billion.


Sources: National Taxpayer Advocate; Joint Committee on Taxation.