Tax Facts for Individuals to Consider in the 4th District

November 17, 2017
Blog Post

In the 2016 tax year, 277,843 federal tax returns were filed in the Fourth Congressional District of Arkansas.  The average income was $42,561, with an average federal income tax of $4,656.

Of those filing returns in the Fourth District, 51,280 (18.5 percent) filers itemized their deductions. This means that over 81 percent of all Fourth District citizens who filed tax returns used the standard deduction – equivalent to either $6,000 for individuals or $12,000 for couples and not able to take advantage of any itemized deductions such as mortgage interest, state and local property taxes, charitable giving, medical expenses, and more.

The proposed tax reform bill in the House would double the standard deduction for individuals and couples, which means even more #AR04 tax filers would use the standard deduction and not itemize.

When looking at income brackets, 8,070 (15.9 percent) of filers itemized their deductions in the $30,000 to $50,000 income bracket while 10,134 (28.3 percent) of filers itemized in the $50,000 to $75,000 bracket. Many, if not all, of these filers would likely be better off financially to take the new standard deduction.  Only 24,939 people had income below $75,000 and chose to itemize, which made up only nine percent of all federal tax filers in the Fourth District.

Only when individuals begin to earn more than $100,000 annually do more than 50% of the federal tax filers itemize deductions. There were only 24,314 (8.9 percent) tax returns filed with income levels above $100,000 in 2016. Of these tax returns, 17,619 people (72 percent) itemized deductions.

Because the bill still allows some mortgage interest, state and local property taxes, and charitable giving to be tax deductible, the increased child tax credit, and doubling of the standard deduction – combined with lower rates – nearly every tax filer in the Fourth District of Arkansas will be able to keep more of their hard-earned money to reinvest in our local economy instead of sending their money to Washington, D.C.

The House bill (passed on Thursday, November 16), is the first step in toward a simpler, fairer tax code and there are many more details to work out with the Senate.