For a lot of homeowners, the mortgage interest deduction feels like the built-in perk of owning a home. It’s real, but it’s not as automatic as it used to be. Whether it actually helps depends on how you file and how your numbers shake out.
TL;DR: Yes, mortgage interest can be tax-deductible, but only if you itemize your deductions instead of taking the standard deduction. The IRS lets you deduct interest on the first $750,000 ($375,000 if married filing separately). However, since the standard deduction is now so high, most homeowners don’t itemize and get no additional tax benefit from their mortgage interest. In short, the deduction is real, but whether it saves you money depends on your situation.
How Does the Mortgage Interest Deduction Work?
The mortgage interest deduction lets homeowners deduct the interest they pay on a home loan from their taxable income, but only if they itemize deductions on Schedule A instead of taking the standard deduction. When you itemize, your mortgage interest reduces the income you’re taxed on, subject to IRS limits.
This isn’t a tax credit or a dollar-for-dollar refund. The savings depend on your tax bracket. If you paid $5,000 in mortgage interest and you’re in the 22% bracket, the actual tax savings would be about $1,100, not $5,000.
Each January, your lender sends Form 1098, which shows how much interest you paid during the year. That’s the amount you report on Schedule A, along with other itemized deductions like property taxes and charitable contributions. If you have more than one mortgage (for example, a primary residence and a second home… but note that this does NOT apply to rental properties) you’ll receive a separate 1098 for each. You can deduct interest on your main home and one additional home, as long as the combined mortgage balance stays within IRS limits.
Do I Need to Itemize to Deduct Mortgage Interest?
You must itemize deductions to write off mortgage interest. If you take the standard deduction, you can’t deduct mortgage interest at all, and that’s where many homeowners lose the benefit.
The standard deduction is now much higher than it used to be. For the 2025 tax year, it’s $30,000 for married couples and $15,000 for single filers, which means many people’s mortgage interest (even when combined with property taxes and charitable donations) doesn’t exceed that threshold. After the 2018 tax law changes, itemizing dropped sharply; by 2020, only about 9% of taxpayers were itemizing.
If your total itemized deductions don’t exceed the standard deduction for your filing status, itemizing won’t help you. In that case, taking the standard deduction is the better move. If they do exceed it (often due to a large mortgage, high state taxes, or significant charitable giving) itemizing may make sense.
Bottom line: you can’t do both. The mortgage interest deduction only helps if itemizing gives you a larger overall deduction than the standard option.
How Much Mortgage Interest Can I Deduct on My Taxes?
If you do itemize, there’s a limit to how much mortgage interest you can actually deduct. As of the time of writing (January 15, 2026), you can deduct interest on up to $750,000 of qualified mortgage debt (for your primary home plus one other home). In other words, if you have a huge mortgage above $750k, the interest on the amount beyond $750,000 isn’t deductible. For loans under that threshold, all the interest is generally deductible (again, assuming you’re itemizing).
To put it simply, $750,000 is the magic number. Let’s say you took out an $800,000 mortgage this year, interest on the first $750,000 of that loan is deductible, but the interest attributable to the remaining $50,000 is not. If your loan is smaller than $750k, you’re in the clear (you won’t hit the cap). This $750k cap applies to new mortgages taken out since late 2017. If you’re one of the lucky folks with a mortgage from before December 16, 2017, you’re grandfathered under the old limit and you can deduct interest on up to $1 million of mortgage debt (plus up to $100k of home equity debt, in some cases). Also, note for married filing separately taxpayers, the limits are halved – $375,000 each (post-2017 loans) or $500,000 each (pre-2018 loans).
A couple more nuances to be aware of:
- Multiple loans: The $750k limit is a combined total. If you have two mortgages (e.g. a $500k first mortgage and a $300k second mortgage), and both are on qualified homes, you’d be $50k over the cap collectively. The IRS would consider interest on that extra $50k as non-deductible. It doesn’t matter if it’s one loan or several, they add it up.
- Home equity loans/HELOCs: Interest on a home equity loan or line of credit can be deducted as mortgage interest only if you used that loan to buy, build, or substantially improve your home. If you refinanced and pulled cash out to remodel your kitchen, for example, that interest counts. But if you took a HELOC to pay off credit cards or cover random expenses, that interest is not deductible under current rules.
- Points and fees: Points you paid on your mortgage (prepaid interest) are usually deductible too, either all at once or over time, because they’re essentially interest. Certain mortgage-related costs like late payment charges or prepayment penalties might also be deductible as interest. But other expenses of buying a home (like property insurance, HOA dues, or most closing costs) are not tax-deductible. We’re really just talking about the interest itself (and things like eligible points which count as interest).
One important note: The mortgage interest deduction rules discussed here are current as of tax year 2025 (for the return you file by April 2026). There were major tax law changes in 2018 that set these $750k/$1M limits, and they were originally going to expire after 2025. However, recent legislation ended up keeping the $750k limit in place going forward (so it doesn’t jump back up to $1M for new loans). Tax laws can always change, but as of now, expect these limits to hold for the 2026 tax year and beyond. If you’re unsure, it never hurts to check for updates or consult a tax professional each year.
About JBS Corp
JBS Corp is an accounting and tax firm with offices in Methuen and Lawrence, MA. 2026 marks our 20th tax season serving individuals and businesses, and we’re proud to combine decades of experience with cutting-edge tools to make tax filing easier for you. We specialize in tax prep and tax planning for individuals and businesses – from helping homeowners understand deductions like mortgage interest, to guiding small business owners with their home office claims, to complex tax preparation you can trust. Over the years, we’ve grown from a local family-owned practice into a nationwide service provider, without losing the personal touch.
At JBS, our goal is simple: take the stress out of tax season and help you keep more of your hard-earned money. Whether you need help with tax preparation in Massachusetts or you’re located across the country, our dedicated tax professionals are here year-round to support you. If you’re looking for guidance on deductions or just want peace of mind that your return is done right, work with JBS. With us, you’ll get honest advice, meticulous attention to detail, and a team that genuinely cares about your financial well-being. Ready to get started or have questions? Contact JBS Corp today and let’s make this your smoothest tax season yet.
FAQs
Only up to the allowed limits. If your mortgage is $750,000 or less (and taken out in recent years), effectively yes, all the interest is deductible if you itemize. If your mortgage is larger, part of your interest isn’t deductible above that cap. And remember, if you’re not itemizing, you get no specific break for that interest at all.
Generally yes, if you refinanced your mortgage, the interest is deductible just like on an original loan, provided the new loan is secured by your home. Refinancing doesn’t restart the $750k limit clock (the IRS treats the new loan as originating on the date of the old loan for the cap if it’s a straight refinance of the remaining balance). But if you cash out extra beyond your previous principal, that additional debt could be subject to the $750k limit or disallowed if used for non-home purposes (similar to a home equity loan). In short, normal refi interest = deductible, cash-out portion interest = maybe, depending on use.
The mortgage interest deduction covers one primary residence and one secondary residence. So yes, you can deduct interest on a loan for a second home, as long as you’re within the $750k total debt limit when mortgages are combined. If you rent out that second home part of the year, there are additional rules (you generally need to use it yourself at least 14 days or 10% of the rental days to count it as a “second home” for the deduction). Also, if you have more than two homes with mortgages, you’ll have to choose which two loans to deduct interest on – the tax code caps it at two homes maximum.
