Can You Deduct Mortgage Interest in 2026? What Changed

Yes, you can still deduct mortgage interest in 2026 if you itemize, but the rules tightened and then got locked in place. For any mortgage taken out after December 15, 2017, you can deduct the interest on up to $750,000 of home loan debt ($375,000 if married filing separately). Loans from on or before that date keep the older $1 million limit. The big news is that this $750,000 cap, which used to be temporary and scheduled to expire after 2025, is now permanent under the 2025 tax law. There is also good news for 2026: mortgage insurance is deductible again. Here is the plain-English version.

This is general information, not tax advice. Your situation is specific, so confirm anything here with a tax professional before you file.

The $750,000 cap is now permanent

The 2017 Tax Cuts and Jobs Act cut the mortgage interest deduction limit from $1 million to $750,000 of acquisition debt for new loans. That cut was set to sunset after 2025 and snap back to $1 million. It will not. The One Big Beautiful Bill Act, signed in July 2025, made the $750,000 limit permanent. So if you are planning around a loan taken after December 15, 2017, treat $750,000 as the ceiling for the foreseeable future, not a temporary rule that reverts. The IRS's official rules for the home mortgage interest deduction spell out how the limit applies to your acquisition debt.

"Acquisition debt" means money you borrowed to buy, build, or substantially improve your primary or second home, secured by that home. That distinction matters for home equity borrowing, more on that below.

PMI is deductible again for 2026

Here is a benefit almost nobody has caught up to yet. The deduction for mortgage insurance premiums, which had lapsed for 2025, is restored starting in the 2026 tax year. If you pay private mortgage insurance because you put less than 20 percent down, those premiums may be deductible again, subject to an income phase-out that begins around $100,000 of adjusted gross income. If your income is under that threshold, this is a real line item worth asking your tax preparer about.

Home equity interest: only if you improved the home

The rules on home equity borrowing are also now permanent, and they are stricter than people remember. Interest on a home equity loan or HELOC is deductible only if you used the money to buy, build, or substantially improve the home that secures the loan, and it still has to fit inside the overall $750,000 limit. Use a HELOC to renovate your kitchen, potentially deductible. Use it to pay off credit cards or fund something unrelated to the home, not deductible. If you are doing a cash-out refinance, the same logic applies to the cashed-out portion.

Rental property: Schedule E, not Schedule C

This one causes real filing mistakes. If you own a rental or investment property, the mortgage interest on it is generally reported on Schedule E, the form for rental real estate income and expenses. It does not go on Schedule C. Schedule C is for a trade or business, and simply renting out property usually is not treated as one for this purpose. Putting rental mortgage interest on Schedule C is a common error. And note the $750,000 personal cap above is about your primary and second homes; investment property interest follows the rental rules on Schedule E instead. Because this is exactly the kind of thing that is easy to get wrong, have a tax professional confirm how your properties should be reported.

Does the deduction even help you?

One honest caveat. The standard deduction is large now, so many homeowners with smaller mortgages take the standard deduction and get no separate benefit from their mortgage interest at all. The deduction only helps if your itemized deductions add up to more than the standard amount. So "is my mortgage interest deductible" and "will deducting it actually lower my taxes" are two different questions. A tax professional can tell you which side of that line you fall on.