The biggest federal tax breaks Estimates for fiscal 2016, in billions of dollars Employer-paid health care health insurance fand long term care insurance Lower tax rates on dividends and long term ca pital gains for Mortgage owne r-occupied residences Earned-income tax credit income sa les and personal property taxes of defined -benefit pension plans Credit for children under age 17
Tax expenditures are defined as departures from “normal” income-tax law that benefit particular individuals and businesses. They include everything from the favorable tax treatment of employer-paid health insurance (estimated to cost the government a total of $769.8 billion over five years) to a tax credit for economic development in American Samoa (estimated five-year cost: less than $50 million).
The biggest individual tax break was for employer-paid health care, health insurance and long-term care insurance, none of which is counted as taxable income. That provision cost the government an estimated $145.5 billion last fiscal year, and is estimated to cost $143.8 billion this year. Taxing dividends and capital gains at lower rates than ordinary income will keep an estimated $134.6 billion out of the Treasury in the current fiscal year. The controversial mortgage-interest deduction will cost $77 billion this fiscal year, while the accompanying deduction for local property tax payments will cost another $34.7 billion.
The biggest federal tax breaks  | Estimates for fiscal 2016, in billions of dollars  | Employer-paid health care health insurance  | $143.8  | fand long term care insurance  | Lower tax rates on dividends  | 134.6  | and long term ca pital gains  | Deferral of active income of  | 108 9  | controlled foreign corporations  | Contributions to and earnings of defined  | 82.7  | contribution retirement plans  | Mortgage interest deduction  | 77.0  | for Mortgage owne r-occupied residences  | Earned-income tax credit  | 73. 3  | Deductibility of (nonbus iness) state and local  | 65.1  | income sa les and personal property taxes  | Contributions to and earnings  | 57.4  | of defined -benefit pension plans  | Credit for children under age 17  | 56.0  | Subsidies for insurance purchased  | 53.5  | through health benefit exchanges  | Source: Estimates of Federal Tax Expenditures for Fiscal Years 2015-2019,  | Joint Committee on Taxation staff Expenditures report JCX-141R-15.  | PEW RESEARCH CENTER 