Mortgage Interest Deduction 2026
The mortgage interest deduction is the biggest tax break most homeowners have — but it is capped, it only works if you itemize, and a high standard deduction means many homeowners get nothing from it. Here is exactly how it works in 2026.
Debt limit
$750,000
Primary + second home
Standard (single)
$16,100
Must beat this to itemize
Standard (joint)
$32,200
Married filing jointly
SALT cap
$40,400
Stacks with mortgage interest
The $750,000 Debt Limit
You can deduct interest on up to $750,000 of "acquisition debt" — the mortgage you used to buy, build, or substantially improve a home — for a primary residence plus one second home combined. If your mortgage balance is at or below $750,000, all of your mortgage interest is deductible (subject to itemizing). If it is higher, only the interest on the first $750,000 of debt counts.
Example: a $500,000 mortgage at 6% generates about $30,000 of interest in a year. Because the balance is under $750,000, the full $30,000 is eligible. A $1,000,000 mortgage generates about $60,000 of interest, but only $45,000 (the portion on the first $750,000) is eligible.
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What Interest Qualifies
- Acquisition debt on your primary home and one second home — qualifies up to the $750,000 limit.
- Home-equity debt — only qualifies if the funds were used to buy, build, or substantially improve the home (not for cars, vacations, or debt consolidation).
- Points paid at closing — generally deductible, often in the year paid if they meet IRS tests.
- Mortgage insurance premiums — may be deductible for lower-income homeowners, subject to annual renewal and income limits.
The Itemizing Catch
Mortgage interest is an itemized deduction. You only benefit if your total itemized deductions exceed the standard deduction. With the 2026 standard deduction at $16,100 for single and $32,200 for joint filers, many homeowners — especially those with smaller mortgages or no state income tax — never itemize and effectively get zero benefit.
How SALT Interacts
The state-and-local tax (SALT) deduction — capped at $40,400 for 2026 — is the other big itemized deduction. Together, mortgage interest + SALT + charitable gifts + other items determine whether itemizing beats the standard deduction. The higher SALT cap helps homeowners in high-tax states clear the bar more easily than under the old $10,000 cap.
A Worked Example
A married couple in California with a $150,000 joint income:
| Itemized deduction | Amount |
|---|---|
| Mortgage interest (on ~$500k loan) | $30,000 |
| State + local taxes (SALT, up to cap) | $9,900 |
| Charitable gifts | $2,000 |
| Total itemized | $41,900 |
| Standard deduction (joint) | $32,200 |
| Itemizing wins by | +$9,700 |
Itemizing saves this couple about $2,130 at a 22% marginal rate (22% × $9,700). A couple with the same mortgage in Texas — where there is no state income tax to deduct — would have only about $32,000 of itemized deductions, making the standard deduction the better choice.
Frequently Asked Questions
Is the $750,000 limit per home or total?
Total, across your primary home and one second home combined. It is not $750,000 per property.
Can I deduct interest on a rental property mortgage?
Rental mortgage interest is a business expense reported on Schedule E, not an itemized deduction — and it is not subject to the $750,000 limit. That is a separate, generally more favorable rule.
Does refinancing change my deduction?
A refinance keeps the same acquisition-debt character up to the original loan amount. Cash-out refinance amounts used for anything other than home improvement generally do not qualify for the deduction.
Is mortgage interest worth it in a no-tax state?
It can still be, but you get less benefit because there is no state tax to stack on top. Without SALT, many no-tax-state homeowners do not exceed the standard deduction and never itemize.
Sources
- IRS Publication 936 — Home Mortgage Interest Deduction ($750,000 acquisition-debt limit).
- IRS Revenue Procedure 2025-32 — 2026 standard deduction and the $40,400 SALT cap.
- IRS — Schedule A itemized deduction rules.
This is informational and not tax advice. Whether itemizing benefits you depends on your full deduction picture and filing status.