Mortgage Interest Tax Deduction Calculator
Estimate your annual tax savings from deducting mortgage interest on your federal and state returns. Most useful for homeowners who itemize deductions and want to know their true after-tax borrowing cost.
Last updated: September 2026
Formula below · 2 sources (IRS, CFPB) · Updated Sep 2026
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About this calculator
The mortgage interest deduction lets homeowners who itemize deduct interest on up to $750,000 of acquisition debt (loans taken out after December 15, 2017). First-year interest is approximated as Mortgage Balance × Interest Rate, scaled down to the $750,000 limit for larger loans. The federal saving is only the part of that interest that lifts your itemized total above the standard deduction: Federal Saving = [max(0, Interest + Other Itemized − Standard Deduction) − max(0, Other Itemized − Standard Deduction)] × Federal Bracket. Other itemized deductions such as state and local taxes (capped at $40,400 in 2026) and charitable gifts count toward clearing the standard deduction first. The 2026 standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household; enter yours. The state saving is estimated as Interest × State Rate, which assumes your state lets you deduct mortgage interest (several do not, and some have their own standard deduction). Choosing Standard Deduction returns $0, since the mortgage interest then gives no benefit.
How to use
Assume a $400,000 mortgage at 6% interest, a 22% federal bracket, a 5% state income tax rate, married filing jointly (standard deduction $32,200), $12,000 of other itemized deductions (state and local taxes), and you itemize. Step 1 — Annual interest: $400,000 × 0.06 = $24,000. Step 2 — Itemized total with the mortgage: $24,000 + $12,000 = $36,000, which beats the $32,200 standard deduction by $3,800; without the mortgage you would take the standard deduction. Step 3 — Federal saving: $3,800 × 0.22 = $836. Step 4 — State saving: $24,000 × 0.05 = $1,200. Total ≈ $2,036 a year. A single filer with the same loan and no other itemized deductions would save ($24,000 − $16,100) × 0.22 + $1,200 = $2,938.
Frequently asked questions
Who qualifies for the mortgage interest tax deduction in 2026?
To claim the deduction, you must itemize deductions on Schedule A rather than take the standard deduction. The loan must be secured by your main home or a second home, and balances are capped at $750,000 for loans taken out after December 15, 2017. Only the interest portion of your payment qualifies — principal repayment does not.
How does the mortgage interest deduction affect my effective interest rate?
The deduction reduces the net cost of your mortgage by shielding interest from income tax. If every dollar of interest is deductible at the margin, your effective rate equals your nominal rate multiplied by (1 − combined marginal tax rate); for example, a 6% mortgage with a 27% combined rate becomes 6% × (1 − 0.27) = 4.38%. In practice part of the interest usually just replaces the standard deduction, so the real reduction is smaller; divide this calculator's result by your annual interest to see the share you actually recover. The higher your tax bracket, the greater the reduction in your real borrowing cost.
Is it always better to itemize deductions to claim mortgage interest?
Not necessarily. Itemizing only makes sense if your total itemized deductions exceed the standard deduction. For many households, especially those with smaller loan balances or lower interest rates, the standard deduction offers a larger benefit. You should calculate both scenarios each tax year, as your situation may change if you pay down the mortgage or if standard deduction thresholds are adjusted.