A taxpayer in the 25% tax bracket may receive a different tax benefit for a $100 expenditure that is classified as a deduction from AGI than he or she will receive for a $100 expenditure that is classified as a deduction for AGI.

Question

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A deduction from AGI (above-the-line deduction) reduces the taxpayer's taxable income, which can result in a larger tax benefit for a taxpayer in a higher tax bracket. On the other hand, a deduction for AGI (itemized deduction) reduces the taxpayer's taxable income after it has been calculated, which can result in a smaller tax benefit for a taxpayer in a higher tax bracket.

A Taxpayer in the 25% Tax Bracket May Receive a Different