How does the mortgage interest deduction decrease over time?

With a fixed-rate mortgage, your monthly payment stays the same, but the split between interest and principal shifts. In the early years, most of your payment is interest — maximizing your deduction. By year 15, roughly half goes to principal. By year 25-30, very little remains as interest. The Year-by-Year tab shows this decline for your specific loan.

Mortgage Interest Deduction Calculator

Q: How much mortgage interest can I deduct in 2026?

In 2026, you can deduct interest on up to $750,000 of mortgage debt for loans originated after December 15, 2017. For loans taken out before that date, the limit is $1,000,000. This limit was made permanent under the One Big Beautiful Bill Act (OBBBA). You must itemize deductions to claim mortgage interest — it cannot be combined with the standard deduction.

Q: What is the SALT cap and how does it affect itemizing?

SALT (state and local taxes) is capped at $40,000 under the 2026 OBBBA, up from $10,000 under the original TCJA. This increase makes itemizing more beneficial for homeowners in high-tax states. Combined with mortgage interest, many homeowners who previously took the standard deduction can now benefit from itemizing.

How much does your mortgage interest save you in taxes? Calculate your 2026 deduction, see how it shrinks over 30 years, and find out whether itemizing beats the standard deduction for your situation.

How much does your mortgage interest deduction save you in taxes?

Mortgage balance

Current outstanding loan balance

Interest rate

Your annual mortgage interest rate

Loan year (1–30)

Which year of your loan are you in?

Marginal tax rate

Your federal income tax bracket

Filing status

Loan origination

Post-2017: $750K limit. Pre-2018: $1M limit.

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How to Use This Calculator

Tax Savings tab

The default tab. Enter your mortgage balance, interest rate, and which year of the loan you are currently in (1 through 30). Select your marginal tax rate and whether your loan was originated post-2017 (the $750K limit applies) or pre-2018 (grandfathered $1M limit). The calculator instantly shows your annual interest paid, the deductible portion, and your tax savings in dollars.

Year-by-Year tab

See a full 30-year amortization table showing interest paid, principal paid, deductible interest, and tax savings for every year of your loan. This makes the declining deduction visible: year 1 delivers the largest deduction; by year 20, interest has fallen dramatically as principal accelerates. Useful when planning whether to refinance or make extra payments.

Worth Itemizing? tab

Enter all your potential itemized deductions: mortgage interest, SALT (state income tax + property tax, capped at $40,000 under OBBBA), charitable donations, medical expenses, and other deductions. The calculator compares your total against the 2026 standard deduction for your filing status and gives a clear recommendation: itemize or take the standard deduction.

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The Formula

The mortgage interest deduction reduces your taxable income by the amount of qualifying interest you pay each year, subject to the loan balance cap:

Annual Interest = Loan Balance x Rate / 12 x 12 (simplified)

Deductible Fraction = min(Loan Balance, $750,000) / Loan Balance

Deductible Interest = Annual Interest x Deductible Fraction

Tax Savings = Deductible Interest x Marginal Tax Rate

Worth Itemizing = (Mortgage Interest + SALT + Charitable + Medical + Other) > Standard Deduction

The $750,000 limit applies to loans originated after December 15, 2017, and was made permanent under OBBBA (One Big Beautiful Bill Act, 2026). Pre-2018 loans keep the original $1,000,000 limit. The interest must be on a qualified residence (your primary home or one second home).

Example

Alex — homeowner in Austin, TX

Loan: $400,000 at 6.5%, originated 2024 (post-2017). Tax bracket: 22% (Single). Property tax: $6,200. No state income tax (Texas). Charitable: $1,500/year.

Tax Savings tab — Year 1

Year 1 annual interest$25,850

Loan balance vs $750K limitUnder limit — fully deductible

Deductible interest$25,850

Marginal rate22%

Annual tax savings$5,687

Monthly tax savings$474

Alex saves $5,687 in federal taxes in year 1 from the mortgage interest deduction alone — roughly $474 per month in tax benefit.

Worth Itemizing? tab

Mortgage interest$25,850

SALT (property tax only)$6,200

Charitable donations$1,500

Total itemized$33,550

Standard deduction (Single)$15,750

WinnerItemize by $17,800

Alex's itemized deductions ($33,550) are $17,800 above the Single standard deduction ($15,750). Itemizing saves an additional $3,916 at the 22% marginal rate compared to taking the standard deduction.

2026 Rules: What Changed Under OBBBA

Mortgage debt limit made permanent: The $750,000 cap on deductible acquisition debt (post-2017 loans) was originally a temporary TCJA provision set to expire. OBBBA made it permanent. Pre-2018 loans keep the $1,000,000 limit.
SALT cap raised to $40,000: OBBBA increased the state and local tax deduction cap from $10,000 (TCJA) to $40,000, making it much easier for homeowners in high-tax states to benefit from itemizing.
Standard deductions: Single $15,750 | Married Filing Jointly $31,500 | Head of Household $23,500. These are higher than pre-TCJA amounts, which is why most renters take the standard deduction.
Medical floor stays at 7.5% of AGI: Permanent under OBBBA (was set to revert to 10%). Useful for high medical expense years.
Tax rates unchanged: 10/12/22/24/32/35/37% brackets remain (permanent TCJA rates under OBBBA).

FAQ

How much mortgage interest can I deduct in 2026? ▼

You can deduct all the interest you pay on up to $750,000 of mortgage debt (post-2017 loans) or $1,000,000 (pre-2018 loans). For a $400,000 mortgage at 6.5%, year 1 interest is approximately $25,850 — fully deductible since the balance is under $750,000. At a 22% marginal rate, that's $5,687 in tax savings. Made permanent under OBBBA.

Is the mortgage interest deduction worth it in 2026? ▼

It depends on whether your total itemized deductions exceed the standard deduction ($15,750 Single, $31,500 MFJ, $23,500 HoH in 2026). With a $400K mortgage at 6.5%, year 1 interest alone is $25,850 — already above the Single standard deduction. Add property tax (SALT cap now $40,000 under OBBBA) and charitable donations, and most homeowners with moderate-to-large mortgages benefit from itemizing.

Why does the mortgage interest deduction shrink over time? ▼

With a standard amortizing mortgage, your monthly payment is fixed, but the split between interest and principal changes. In month 1, most of your payment is interest. Over time, you owe less principal, so less interest accrues each month — and more of your payment goes to paying down the balance. By year 20 on a $400K mortgage, annual interest falls from ~$25,850 to ~$13,000. By year 28, it's under $3,000.

What is the SALT cap and how does it affect itemizing? ▼

SALT (state and local taxes) includes state income tax (or sales tax) plus property tax. Under OBBBA 2026, the cap is $40,000 — up from $10,000 under the original TCJA. This significantly helps homeowners in high-tax states like New York, California, and New Jersey. Combined with mortgage interest, many more homeowners can now clear the standard deduction threshold and benefit from itemizing.

Can I deduct home equity loan interest in 2026? ▼

Yes, but only if the loan proceeds were used to buy, build, or substantially improve your home. Home equity loans used for other purposes — debt consolidation, vacations, general expenses — are not deductible since TCJA. The combined balance of your primary mortgage plus home equity loan cannot exceed $750,000 (post-2017) for full deductibility.

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