Homeowner Tax Updates You’ll Actually Want to Read

Mortgage Interest, PMI Deductions, and Energy Credits Explained (Without the Jargon)

Owning a home is expensive enough — mortgage payments, insurance, repairs, energy upgrades, and somehow another trip to Home Depot. The good news? Recent tax law changes under the One Big Beautiful Bill Act (OBBBA) bring some long-term clarity and relief for homeowners.

Let’s walk through what’s changed, what stayed the same, and what you should care about — with real-life examples, not IRS code.

🏡 Mortgage Interest Deduction: Now Permanent

For years, homeowners faced uncertainty about how much mortgage interest they’d be allowed to deduct. That uncertainty is now gone.

What’s the rule now?

The mortgage interest deduction limit is officially permanent:

• You can deduct interest paid on up to $750,000 of mortgage debt

• $375,000 if Married Filing Separately

• Applies to your primary home and one second home

• You must itemize to claim it

This limit was set to expire after 2025 — but the new law locks it in for the long haul.

Important exception (the “grandfather” rule)

If your mortgage originated before December 15, 2017, you may still deduct interest on up to:

• $1,000,000 of mortgage debt

• $500,000 if Married Filing Separately

That’s a big deal for long-time homeowners.

Real-life example

If you bought your home in 2020 with a $600,000 mortgage, nothing changes — you can still deduct all eligible interest.

If you bought in 2016 with a $900,000 mortgage, you may still qualify under the old, higher cap.

🧾 PMI Is Back — And This Time It’s Permanent

This is one of the biggest wins for middle-class homeowners.

Mortgage insurance premiums — including:

• Private Mortgage Insurance (PMI)

• FHA mortgage insurance (upfront and annual)

• VA funding fees

• USDA guarantee fees

…are now permanently deductible starting in tax year 2026.

These deductions had expired after 2021. They’re now back for good.

How it works

• PMI is treated as mortgage interest

• Income limits apply:

  • The deduction phases out once AGI exceeds $100,000

  • ($50,000 if Married Filing Separately)

  • The deduction is reduced by 10% for every $1,000 over the limit

In some cases, PMI may be deductible even if you don’t itemize, depending on how the IRS implements the rule — a huge benefit for newer homeowners.

Real-life example

If you bought your home with 5% down and pay $2,400 per year in PMI, that amount could now reduce your taxable income instead of being a sunk cost.

For many first-time buyers, that’s real money back.

🚫 What’s Still NOT Deductible

Not everything labeled “home-related” qualifies:

Home equity loan interest

• Interest on home equity loans or HELOCs remains non-deductible

• Even if used for renovations or personal expenses

That hasn’t changed — and it still trips people up.

🏠 SALT Deduction Increase (Bonus Win)

While not directly tied to mortgages, it matters for homeowners who itemize.

• The SALT deduction cap increases to $40,000

• Applies for tax years 2025–2029

This helps homeowners in higher-tax states deduct more of their property and state income taxes.

🌱 Energy Credits: A Closing Window

If you’ve been thinking about upgrading your home to be more energy-efficient, pay attention — these credits are ending soon.

Expiring after December 31, 2025:

• Energy Efficient Home Improvement Credit (windows, doors, insulation, heat pumps)

• Residential Clean Energy Credit (solar panels, battery storage, geothermal)

Any purchases or installations made after 2025 will not qualify for these credits.

Real-life example

If you install solar panels in November 2025, you may still qualify for a substantial credit. If you wait until January 2026? The credit is gone.

Same project. Very different tax result.

📝 What Homeowners Should Do Now

Here’s your simple, no-stress checklist:

✔ Know when your mortgage originated

✔ Track PMI and mortgage insurance payments

✔ Don’t assume home equity interest is deductible

✔ Plan energy upgrades before the end of 2025

✔ Consider itemizing if PMI and SALT deductions apply

✔ Talk to a tax professional before major home decisions

Final Thoughts

The OBBBA brings long-term stability to homeowner tax benefits — especially for those paying mortgage insurance or carrying sizable loans. The key takeaway?

• Mortgage interest rules are clearer and permanent

• PMI deductions are back for good

• Energy credits have a firm expiration date

Smart planning now can mean meaningful savings later — and fewer surprises when tax season rolls around.

Your home is already a big investment. Make sure your tax strategy works just as hard as you do.