Deductible interest this year and the tax it actually saves
Updated 2026-10-02
The mortgage interest deduction only lowers your tax if you itemize, and itemizing only pays when your mortgage interest plus other itemized deductions beat the standard deduction ($32,200 for married couples filing jointly in 2026). The saving is the amount above the standard deduction times your tax bracket. Enter your loan, rate and other deductions to see the interest you pay this year, the deductible part and the tax it saves. see the interest paid each year · check the monthly payment · check whether points pay off.
Your loan and tax situation
This year's deduction
Federal tax saved
$1,247
at a 22% bracket
Mortgage interest paid this year
$25,868
$25,868 deductible
Itemized total
$37,868
vs $32,200 standard deduction
Above the standard deduction
$5,668
only this part lowers your tax
Estimates for planning, not a loan offer or financial advice. Every rate and cost here is a number you enter or an example you can change; confirm figures with your lender.
How the deduction is calculated
The interest you pay in a year comes from the amortization schedule: each month's interest is the balance × the annual rate ÷ 12, and the calculator adds up the first 12 months from the balance you enter. Under IRS Publication 936, interest on home acquisition debt up to $750,000 ($375,000 married filing separately) is deductible, or $1 million ($500,000) for debt incurred before December 16, 2017. When the average balance is over the limit, the deductible share is:
Deductible interest = interest paid × limit ÷ average balance
Mortgage interest is an itemized deduction, so it only counts if your itemized total beats the standard deduction. For tax year 2026 that is $16,100 (single or married filing separately), $32,200 (married filing jointly) and $24,150 (head of household), per the IRS 2026 inflation adjustments.
Tax saved = max(0, interest deductible + other itemized − standard deduction) × tax bracket
Worked example
A married couple owes $400,000 at 6.5% on a new 30-year loan. Over the first 12 months they pay $25,868 of interest, all deductible because the balance is under $750,000. With $12,000 of other itemized deductions their itemized total is $37,868, which is $5,668 more than the $32,200 standard deduction. In the 22% bracket that saves $1,247 of federal tax — far less than the interest itself, because the first $20,200 of interest only replaces the standard deduction.
On a $900,000 loan at the same rate the year's interest is $58,204, but the average balance of $895,443 is over the limit, so $48,750 is deductible.
What the estimate leaves out
Points paid on a purchase, mortgage insurance premiums and home equity debt not used to improve the home follow their own rules in Publication 936.
State income tax deductions, the SALT cap and any phase-outs for high incomes are not modeled: enter your deductible state and local taxes as part of other itemized deductions.
The bracket is applied to the whole excess; if it crosses a bracket boundary the saving is a little lower.
This is an estimate for planning, not tax advice. Your Form 1098 and a tax professional or tax software give the final figure. To see interest by year, use the amortization schedule.
Tax-time paperwork
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Is mortgage interest deductible on a $400,000 loan?
Yes, it's under the $750,000 limit, but it only saves tax if you itemize. At 6.5%, the first year's interest is about $25,868. A married couple with $12,000 of other itemized deductions would itemize $37,868, which is $5,668 above the $32,200 standard deduction: about $1,247 of tax saved in the 22% bracket.
How much mortgage interest can I deduct?
Interest on up to $750,000 of mortgage debt used to buy, build or substantially improve your main or second home ($375,000 if married filing separately). Debt taken on before December 16, 2017 keeps the older $1 million limit ($500,000 if married filing separately). If your average balance is over the limit, only the matching share of the interest is deductible.
Do I get the deduction if I take the standard deduction?
No. Mortgage interest is an itemized deduction on Schedule A. You pick either the standard deduction or your itemized total, whichever is larger. For 2026 the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly and $24,150 for heads of household.
How much tax does the mortgage interest deduction save?
Only the part of your itemized deductions above the standard deduction saves tax, and it saves that amount times your marginal tax rate. It does not save the full interest amount, and it saves nothing if you would not itemize.
Where do I find how much interest I paid?
Your servicer sends Form 1098 each January showing the mortgage interest you paid in the previous year. This calculator estimates it from your loan so you can plan before the form arrives.
What other deductions count toward itemizing?
State and local taxes (income or sales tax plus property tax, up to the SALT cap in the Schedule A instructions), charitable gifts, and some medical expenses above a share of income. Enter their total in the other itemized deductions field.
