Mortgage Interest Deduction Calculator
A $400,000 mortgage at 6.5% generates $26,000 of interest a year, but that figure alone tells you nothing about your tax bill. Whether any of it saves you money depends on the 2026 standard deduction, the new $40,400 SALT cap, the reinstated PMI deduction, and two OBBBA provisions most online calculators still ignore: the 0.5% AGI floor on charitable gifts and the 35% cap on itemized-deduction value for top-bracket filers. This calculator wires all five together, compares itemizing against the exact 2026 standard deduction for your filing status, and derives your marginal bracket from taxable income, which is the only honest way to price the benefit.
Estimated federal tax savings
Estimate only. Taxable income is approximated as income minus the better of your itemized or standard deduction. See a tax professional before filing.
Quick Answer
Take a single filer with $120,000 of income, a $400,000 mortgage at 6.5% originated in 2021, $6,000 of property tax, $8,000 of state tax and $2,000 of charitable gifts. Annual interest is $26,000, fully deductible under the $750,000 limit. SALT contributes $14,000, safely under the 2026 $40,400 cap. The new 0.5% AGI floor trims the charitable deduction to $1,400, so itemized deductions total $41,400 against a $16,100 standard deduction. Itemizing wins by $25,300, worth $5,566 at the 22% marginal bracket, and the after-tax mortgage rate is 5.07%. Every figure above is a live run of the calculator, pre-filled for you.
Key takeaways
- 2026 figures only: $40,400 SALT cap, reinstated PMI deduction, $16,100 / $32,200 / $24,150 standard deductions, and a $6,000 senior bonus. Tools still showing a $10,000 SALT cap are answering last year's question.
- Charitable gifts now carry a 0.5% AGI floor for itemizers: on $120,000 of income, the first $600 of giving is not deductible.
- Filers in the 37% bracket get at most 35 cents of tax value per dollar of itemized deductions; the calculator applies the cap automatically.
- Your bracket is computed from taxable income after the better deduction, not from gross income. Rating the bracket on gross income, as simpler tools do, overstates the savings.
How to use the mortgage interest deduction calculator
Fill in your loan and tax details, click Calculate my deduction, and read the verdict: whether to itemize or take the standard deduction, and what the interest really costs you after tax. Results stay hidden until you calculate.
- Describe the loan: balance, rate, filing status and, optionally, the origination date and years left. The date decides whether the $750,000 or the $1,000,000 acquisition-debt limit applies; years left switches the interest figure from balance times rate to the exact first twelve months of your amortization schedule. If you only know your monthly payment, the mortgage payment calculator backs out the balance and rate first.
- Add your other Schedule A items: property tax, state and local income or sales tax, PMI premiums, points, charitable gifts and anything else you itemize. Income is used as your AGI for the PMI phaseout, the SALT cap phase-down, the charity floor and the senior bonus phaseout.
- Read three lines: Recommended tells you whether to itemize, Estimated federal tax savings is the headline number (30px, top of the results), and Effective mortgage rate after tax benefit shows what the loan truly costs you.
Two honesty notes about the math. The PMI phaseout here is a straight-line approximation between $100,000 and $110,000 of AGI; the statute steps down in $1,000 increments, and married-filing-separately filers face a lower $50,000 threshold, so treat borderline PMI cases as estimates. The income field is an AGI approximation, and real returns have above-the-line adjustments this tool does not model.
The 2026 formulas behind the numbers
Every figure in the results traces to a short chain of 2026 rules. Annual interest is balance times rate, or the exact first year of the amortization schedule when you enter years left. Deductible interest is prorated when the balance exceeds the acquisition-debt limit for your origination date. Points deduct in full when paid on a this-year purchase and amortize over the loan term otherwise. PMI deducts in full at or below $100,000 of AGI and phases to zero at $110,000. SALT is capped at $40,400 ($20,200 married filing separately), shrinking 30 cents per dollar of income above $505,000 ($252,500 separately) down to a $10,000 floor.
Standard = base ($16,100 single / $32,200 joint / $24,150 head of household) + $6,000 senior bonus per person 65+
Tax savings = (itemized − standard, if positive) × marginal rate, capped at 35% for the 37% bracket
The marginal bracket comes from the 2026 IRS tables applied to taxable income after the better deduction. That ordering matters: a $120,000 earner who itemizes $41,400 has $78,600 of taxable income and lands in the 22% bracket, while a tool that brackets gross income would price the same deduction at a higher rate and inflate the savings. The $6,000 senior bonus phases down 6% of income above $75,000 ($150,000 joint) and stacks on top of the base standard deduction either way.
Worked example: a $400,000 mortgage at 6.5%
The calculator opens with this example pre-filled. A single filer earns $120,000, owes $400,000 at 6.5% on a loan originated in 2021, and paid $6,000 of property tax, $8,000 of state income tax and $2,000 of charitable gifts.
| Line | Amount |
|---|---|
| Annual mortgage interest | $26,000.00 |
| Deductible interest (limit $750,000) | $26,000.00 |
| SALT deduction | $14,000.00 |
| Deductible charitable gifts (after 0.5% AGI floor) | $1,400.00 |
| Total itemized | $41,400.00 |
| 2026 standard deduction (single) | $16,100.00 |
| Extra deduction vs standard | $25,300.00 |
| Taxable income ($120,000 − $41,400) | $78,600.00 |
| Estimated federal tax savings (22%) | $5,566.00 |
Without the 0.5% charity floor this example would show $42,000 itemized and $5,698 of savings. The floor costs this filer $132, which is exactly the kind of quiet 2026 change the calculator exists to catch. Effective mortgage rate after the benefit: ($26,000 − $26,000 × 22%) ÷ $400,000 = 5.07%.
What changed for 2026
Five provisions of the One Big Beautiful Bill Act, signed July 4, 2025, reshape this math for the 2026 tax year, and all five are wired into the calculator above.
- SALT cap $40,400: up from $10,000, rising 1% a year through 2029 before reverting to $10,000 in 2030. It phases down 30 cents per dollar of income above about $505,000, never below $10,000.
- PMI deductible again: mortgage insurance premiums are treated as mortgage interest, permanently reinstated for 2026 after expiring in 2021. Full deduction at $100,000 AGI or less, phasing out by $110,000.
- $6,000 senior bonus: filers 65 or older get $6,000 per person for 2025 through 2028, on top of the standard deduction, phasing down above $75,000 of income ($150,000 joint).
- 0.5% AGI charity floor: itemizers deduct only charitable gifts above 0.5% of AGI. Non-itemizers get a separate $1,000 ($2,000 joint) cash-gift deduction instead.
- 35% cap on itemized value: the new limitation replaces the old Pease rule. Filers in the 37% bracket get at most 35 cents of tax benefit per dollar of itemized deductions.
The $750,000 acquisition-debt limit ($375,000 married filing separately, $1,000,000 for pre-December 16, 2017 loans) is now permanent rather than expiring, and the 2026 standard deductions are $16,100 single, $32,200 joint and $24,150 head of household.
What competing deduction calculators miss
Mortgage deduction tools fall into three camps, and each leaves money or accuracy on the table. AARP's mortgage tax calculator carries correct 2026 standard deductions, but it covers interest only: no SALT, no PMI, no derived bracket, and it assumes you itemize rather than checking. The classic Dinkytown-style engines (also embedded by small banks) make you type in your own tax bracket, skip the itemize-vs-standard comparison entirely with a disclaimer, and know nothing of 2026 provisions. Guide-style pages are worse: one prominent 2026 guide still shows a $10,000 SALT cap and $15,000/$30,000 standard deductions, which are 2025 figures, and several "2026" itemize-vs-standard tools quote the same stale numbers.
The gap this page fills is the combination: origination-date-aware acquisition limits, exact first-year amortization as an option, the $40,400 SALT cap with its phase-down, the reinstated PMI deduction, the $6,000 senior bonus, the 0.5% charity floor, the 35% top-bracket cap, and the bracket derived from taxable income after the better deduction. No competitor wires all of them into one itemize-vs-standard verdict.
Tax disclaimer
This calculator gives planning estimates for the 2026 tax year, not tax advice. Real returns involve above-the-line adjustments, AMT, state rules and documentation requirements this tool does not model. Confirm anything that changes your withholding or estimated payments with a qualified tax professional.
Frequently asked questions
Yes. You can deduct interest on up to $750,000 of acquisition debt ($375,000 if married filing separately) on loans originated after December 15, 2017. Loans from before that date keep the older $1,000,000 limit. Home equity loan interest only qualifies when the borrowed money bought, built or substantially improved the home securing the loan.
$40,400 per return, or $20,200 if you are married filing separately. Above about $505,000 of income ($252,500 married filing separately) the cap shrinks by 30 cents per dollar of income, but never below $10,000 ($5,000 separately). It rises 1% a year through 2029, then reverts to $10,000 in 2030.
Yes, for the first time since 2021. The One Big Beautiful Bill Act permanently reinstated the mortgage insurance premium deduction, treated as mortgage interest on Schedule A. The full deduction is available at $100,000 of AGI or less, phases down through $110,000, and disappears above that.
Starting in 2026, itemizers can deduct charitable contributions only above 0.5% of adjusted gross income. With $120,000 of AGI, the first $600 of giving is not deductible, so a $2,000 gift produces a $1,400 deduction. This calculator applies the floor automatically.
For 2026, taxpayers in the 37% bracket get at most 35 cents of tax value per dollar of itemized deductions. The tool applies this by valuing savings at 35% whenever your marginal rate lands in the 37% bracket, and says so in the results.
Itemize only when your total itemized deductions beat the standard deduction: $16,100 single, $32,200 married filing jointly, $24,150 head of household, plus a $6,000 bonus per person 65 or older. The calculator compares both and recommends the larger.
Filers 65 or older get a new $6,000 bonus deduction for 2025 through 2028, phasing down 6% of income above $75,000 ($150,000 joint). It stacks on top of the standard deduction and counts in the itemize-vs-standard comparison.
No. Points paid on a home purchase this year generally deduct in full. Points on a refinance must be spread over the loan term, so $3,000 of refinance points on a 27-year loan yields about $111 of deduction per year. Tick the purchase-points box only for a this-year purchase.
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References
- Internal Revenue Service. 2026 Publication 936 (draft), Home Mortgage Interest Deduction: reinstated mortgage insurance premium deduction, the $750,000/$375,000 limit and the pre-December 16, 2017 $1,000,000 rule. Accessed October 23, 2026.
- TaxAct. 2026 Tax Changes: What to Know Before You File: full 2026 bracket tables by filing status. Accessed October 23, 2026.
- TurboTax (Intuit). Tax Deductions 2026: What Is New or Changed: the 0.5%-of-AGI charitable floor with worked example, and the SALT cap phase-down above $505,000/$252,500. Accessed October 23, 2026.
- Vanguard Charitable. Charitable Bunching Under OBBBA: When It Makes Sense and When It Does Not: floor mechanics and no carryforward of floor-disallowed amounts. Accessed October 23, 2026.
- Lowenstein Sandler LLP. OBBBA Provisions Impact Charitable Contribution Deductions: the four 2026 charitable changes including the 35% value cap. Accessed October 23, 2026.
- American Association of Individual Investors. The Key OBBB Act Tax Changes for Individual Investors: the 35% cap applies to all itemized deductions including SALT. Accessed October 23, 2026.
- American Association of Individual Investors. What the One Big Beautiful Bill Act Means for Your Taxes: the 2/37ths mechanics of the new itemized-deduction limitation. Accessed October 23, 2026.
- Bankrate. When You Can Cancel PMI (and What It Costs): PMI deduction reinstated for 2026, treated as mortgage interest, $100,000 AGI phaseout. Accessed October 23, 2026.
- Nisivoccia LLP. New OBBBA Tax Law Includes Major Changes for Homeowners: PMI phaseout of 10% per $1,000 above $100,000 ($500 steps for separate filers). Accessed October 23, 2026.
- Tax Foundation. Big Beautiful Bill Explained: Tax Changes FAQ: SALT cap $40,000 for 2025 rising 1% yearly, phaseout structure, $10,000 reversion in 2030. Accessed October 23, 2026.
- T. Rowe Price Charitable. One Big Beautiful Bill and Charitable Giving: the 35% value cap in practice ($1,000 of charity yields $350 for top-bracket filers). Accessed October 23, 2026.