Find out exactly how much your mortgage saves you in taxes. We apply 2026 federal tax brackets, your state's mortgage interest deduction rules, and the updated SALT cap to give you a precise year-by-year savings estimate.
Auto-fills property tax rate and state of residence
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401k, HSA, health insurance, etc.
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%
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≈ 1.20% of home value
Enter your income, state, and mortgage details.
We'll calculate your exact tax benefit from homeownership.
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The mortgage interest deduction (MID) lets homeowners deduct interest paid on their mortgage from federal taxable income — but only when itemizing deductions. Since the 2017 tax law roughly doubled the standard deduction, only about 10–15% of taxpayers now itemize, down from ~30% before.
For those who do itemize, the benefit is straightforward: your marginal tax rate × the interest you paid that year. The deduction is most valuable in early years when interest makes up most of your payment, and gradually shrinks as you pay down principal.
$750k
Loan cap (2017+)
Max deductible balance
~12%
Taxpayers who itemize
Post-2017 tax law
37%
Max federal benefit
Of interest paid
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Standard Deduction vs Itemizing (2026)
You only benefit from the MID if your total itemized deductions beat the standard deduction. Here's when itemizing typically pays off:
Filing Status
Std. Deduction
Itemize if…
Single
$15,000
Mortgage interest alone exceeds $15k
Married Filing Jointly
$30,000
Combined deductions exceed $30k
Head of Household
$22,500
Combined deductions exceed $22.5k
Example: A married couple with a $500,000 mortgage at 7% pays ~$34,800 in interest in year one. Add $8,000 in property tax (SALT-capped) and $5,000 in charitable gifts = $47,800 total — well above the $30,000 threshold. They benefit. A couple with a $250,000 mortgage likely does not.
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The SALT Cap — How It Limits Your Deduction
The SALT (State and Local Tax) cap limits how much state income tax and property tax you can deduct on your federal return. The 2026 law raises it temporarily but phases it out at higher incomes:
Under $500k AGI
Temporary increase from $10k
$40,000
2025–2028
$500k–$600k AGI
Linearly reduced to $10k
Phases out
2025–2028
Above $600k AGI
Same as original 2017 cap
$10,000
All years
After 2028
Cap reverts to original limit
$10,000
All filers
The SALT cap most impacts homeowners in high-tax states (CA, NY, NJ, IL, MA) who often pay $15,000–$25,000+ in combined state income and property taxes.
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State-Level Mortgage Deduction Rules
Most states with income taxes follow federal MID rules, but several have notable differences — some more generous, some more restrictive.
✅MID Allowed
AL, AZ, AR, CA, CO, CT, DE, GA, HI, IA, KS, KY, LA, ME, MD, MN, MS, MO, MT, NE, NM, NY, NC, ND, OK, OR, RI, SC, VA, VT, WI
Follows federal rules (with state-specific brackets)
❌MID Not Allowed
AK, FL, IL, IN, MA, MI, NV, NJ, NH, OH, PA, SD, TN, TX, WA, WV, WY
Either no income tax or MID specifically disallowed
🔵Special: CA
California
Allows MID but caps deductible loan at $1,000,000 — more generous than federal $750k
💡Credit States
UT (20% credit), WI (5% credit)
Convert the deduction to a direct tax credit — works differently from a standard deduction
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Mortgage Tax Benefit — Frequently Asked Questions
How much do homeowners actually save on taxes?
It varies enormously based on your income, loan size, state, and whether you itemize. A married couple with a $500,000 mortgage at 7% pays ~$34,800 in interest in year one. At a 22% federal bracket with itemization, that's about $7,656 in federal savings — but only if their total itemized deductions exceed the $30,000 standard deduction. Higher-income buyers in high-tax states tend to benefit most.
What is the mortgage interest deduction?
The mortgage interest deduction (MID) lets homeowners deduct interest paid on their mortgage from their federal taxable income — but only if they itemize deductions instead of taking the standard deduction. It applies to interest on loans up to $750,000 (for mortgages originated after Dec 15, 2017). The deduction is worth your marginal tax rate × the interest you paid.
What is the SALT cap and how does it affect my deductions?
The SALT (State and Local Tax) cap limits how much state income tax and property tax you can deduct on your federal return. Under the 2026 tax law, the cap is $40,000 for the first four years for filers under $500,000 AGI, then reverts to $10,000. Above $500,000 AGI, the $40,000 cap phases down to $10,000 over a $100,000 range. This cap significantly limits the MID's value for high-tax-state residents.
Do I need to itemize to benefit from the mortgage tax deduction?
Yes — the mortgage interest deduction only applies if your total itemized deductions exceed the standard deduction ($15,000 single / $30,000 married in 2026). Due to the high standard deduction, only about 10–15% of taxpayers now itemize. You're most likely to benefit from itemizing if you have a large mortgage, live in a high-tax state, and give to charity.
Which states offer additional mortgage interest deductions?
Most states that have income taxes follow federal treatment and allow a mortgage interest deduction on state returns. Notable exceptions where MID is NOT allowed on state returns include: Texas (no income tax), Florida (no income tax), Illinois, Indiana, Massachusetts, Michigan, New Jersey, Ohio, Pennsylvania, and Washington. California allows MID but caps it at $1M in loan balance (more generous than federal).
How does the standard deduction affect whether I should itemize?
You should itemize only when your total qualifying deductions (mortgage interest + SALT up to the cap + charitable donations + other) exceed the standard deduction. In 2026, that's $15,000 for single filers and $30,000 for married filing jointly. A married couple with a $400,000 mortgage at 7% generates ~$27,800 in year-one interest — below the standard deduction threshold by itself, meaning they'd need additional deductions to benefit.
Does the mortgage tax deduction make homeownership significantly cheaper?
For high-income buyers with large mortgages in high-tax states, yes — the benefit can be $5,000–$15,000 annually. For median-income buyers, the impact is often zero (they don't clear the standard deduction threshold) or modest. The deduction is most powerful in your early years when interest makes up most of your payment, and it declines each year as you pay down principal.