Taxpayers in states along the East and West Coasts are grabbing the lion’s share of tax savings from the mortgage interest deduction, the third largest tax expenditure that saved taxpayers filers deducted about $72 billion in 2011.

The benefits of the mortgage interest deduction skews heavily toward certain states, particularly along parts of the East and West Coasts.  The percentage of tax filers deducting mortgage interest ranges from nearly 37 percent in Maryland to 15 percent in West Virginia and North Dakota.  The average mortgage interest deduction for all tax filers (not just those taking the deduction) varied from a high of $4,580 per tax filer in Maryland to a low of $1,192 per filer in North Dakota, according to a new report released yesterday by The Pew Charitable Trusts. The national average was $2,713.

The variation across metropolitan areas within states is even greater, with tax filers in larger areas generally claiming the deduction at much higher rates and greater average amounts than filers in medium- and small-size areas. In Texas, for example, the state’s highest claim rate-in the Austin area-is 4 times larger than the lowest rate, in the Odessa area.

With the housing recovery and higher home values, the mortgage interest deduction is expected to grow and become more of a target for tax reformers in Washington.  Before the onset of the housing crisis in 2007 the total mortgage interest deducted by tax filers peaked at $543 billion in deductions and roughly $85 billion in forgone revenue.  Between 2007 and 2010, the total amount deducted fell 28 percent, and the number of claims declined by 12 percent.