Obama Budget Would Cut High-Earner Deductions

Washington, DC, Feb. 15, 2011 -- President Obama's 2012 budget proposes to cut itemized deductions for high-income taxpayers, including the mortgage interest tax deduction.

Currently, interest on a mortgage taken out to buy or improve a home can be fully deducted if the amount of the loan is less than $1 million for married couples and $500,000 for singles.

Home equity loans taken out for anything else is limited to $100,000 for couples and $50,000 for singles.

Obama's budget did not specifically name the mortgage interest tax deduction. But he does propose cuts "across-the-board."

A spokesperson for the office of management and budget said the proposal caps the value of itemized deductions at the 28% tax bracket.

The National Association of Realtors, the biggest advocate for the mortgage interest tax deduction, said it opposes the proposal.