Mortgage Interest Deduction Calculator 2026 (US)

What Is the Mortgage Interest Deduction Cap?

The home mortgage interest deduction lets US taxpayers who itemize subtract interest paid on a qualified residence loan from their taxable income. Internal Revenue Code Section 163(h)(3) caps the amount of acquisition indebtedness whose interest qualifies. For loans originated after December 15, 2017, only interest on the first $750,000 of mortgage principal ($375,000 if married filing separately) is deductible. Loans originated on or before December 15, 2017 keep a grandfathered $1,000,000 cap ($500,000 MFS). The deduction applies to one main home plus one second home, combined. Source: IRS Publication 936.

Above the cap, the deduction is prorated: if your average balance is $900,000 on a post-2017 loan, only $750,000 / $900,000 = 83.3% of the interest you paid that year is deductible. The remaining 16.7% is personal interest and not deductible against income tax. This calculator applies the proration rule automatically and estimates the federal tax saved at your marginal bracket.

How the OBBB Act 2025 Changed the 2026 Mortgage Cap

The Tax Cuts and Jobs Act of 2017 (TCJA) was originally written so that the $750,000 cap, the elimination of HELOC interest deductibility (when not used to buy/build/substantially improve the home), and other individual provisions would sunset on December 31, 2025 — reverting the cap to $1,000,000 for tax year 2026. That sunset did NOT happen. The One Big Beautiful Bill Act (OBBB, P.L. 119-21) signed July 4, 2025 made the $750,000 cap permanent, alongside making the TCJA individual brackets and the QBI deduction permanent.

Practical effect for 2026: if you took out your mortgage on December 16, 2017 or later, you remain subject to the $750,000 / $375,000 (MFS) cap for the indefinite future. There is no longer a planned reversion. Pre-Dec-15-2017 debt continues to be grandfathered at the higher $1M / $500k cap, including a pure refinance of that grandfathered debt up to its original principal — the cap on the refinance follows the original acquisition date, not the refi date.

Refinance, Cash-Out, and HELOC Treatment

A refinance of a grandfathered pre-2017 loan keeps the $1,000,000 cap, but only up to the balance on the day of the refi — any new dollars borrowed on top (a cash-out refi) are treated as new acquisition debt and fall under the $750,000 post-2017 cap. If your old balance is $700,000 on a 2015 loan and you refi into an $850,000 loan in 2026, the first $700,000 keeps the $1M cap and the additional $150,000 sits under the $750,000 cap.

HELOC interest is deductible only when the loan is used to buy, build, or substantially improve the home that secures the loan. HELOC funds used for credit card payoff, college tuition, or a car remain non-deductible — that 2017 TCJA change was also made permanent by the OBBB Act 2025. Home equity debt that is acquisition indebtedness counts toward the same $750,000 / $1M total cap as the first mortgage; you do not get a separate $100,000 home-equity bucket.

Common Pitfalls and How to Verify

Three common errors: (1) using year-end balance instead of the average balance — the IRS Pub 936 worksheet method or the (beginning + ending) ÷ 2 simplified method should be used; (2) forgetting that MFS cuts the cap in half ($375k post-2017, $500k pre-2017); (3) including grandfathered and post-2017 debt in the same bucket — they have separate caps and the IRS Pub 936 has a specific worksheet for taxpayers carrying both. Always cross-check against Form 1098 box 1 (interest received) and box 2 (outstanding mortgage principal) before filing.

This calculator is an estimate. For final filing, use IRS Publication 936 Table 1 and 2026 Schedule A. If you have a non-residence loan, a loan secured by a third or later home, or boats/RVs claimed as a qualified residence, see Pub 936 Part I for the eligibility rules. Last updated: May 3, 2026.