Mortgage Tax Deduction Calculator
Itemizing Only Pays Off Past a Threshold
Mortgage interest is deductible, but that fact alone doesn't tell you whether it's worth anything on your tax return. Since the standard deduction roughly doubled under the 2017 tax law, most homeowners with modest mortgages no longer clear the bar where itemizing beats simply taking the standard amount. This calculator runs the actual comparison instead of assuming interest automatically saves you money.
The Formula
SALT Deduction = min(Property Tax, $10,000 cap)
Total Itemized Deductions = Mortgage Interest + SALT + Other Itemized Deductions
Tax Savings = max(0, Total Itemized − Standard Deduction) × Marginal Tax Rate
Where This Calculation Matters
- Deciding whether to itemize at all — if your total itemized deductions don't exceed the standard deduction for your filing status, the mortgage interest deduction provides zero actual tax benefit.
- The SALT cap bites harder than people expect — state and local tax deductions (including property tax) are capped at $10,000 combined, which limits the itemizing benefit for owners in high-tax areas.
- Early loan years matter most — amortized loans front-load interest, so the deduction is largest in year one and shrinks every year after as more of the payment goes to principal.
- Comparing loan sizes — a larger loan generates more year-one interest, which can be the deciding factor in whether itemizing clears the standard deduction threshold.
Standard Deduction by Filing Status
| Filing status | Standard deduction |
|---|---|
| Single | $14,600 |
| Married filing jointly | $29,200 |
| Head of household | $21,900 |
Worked example: a $320,000 loan at 6.5% over 30 years generates $20,694.69 of interest in year 1. Add a $9,000 property tax bill (fully under the SALT cap) and total itemized deductions come to $29,694.69 — just $494.69 over the $29,200 married-filing-jointly standard deduction, worth only $108.83 in tax savings at a 22% marginal rate.
How to Use This Calculator
- Enter the Loan Amount, Interest Rate, and Loan Term (years).
- Enter your Marginal Tax Rate and select your Filing Status.
- Enter Annual Property Tax (subject to the $10,000 SALT cap) and any Other Itemized Deductions (charitable giving, other state taxes, etc.).
- Select Calculate to see year-1 interest, whether itemizing beats the standard deduction, and the resulting tax savings.
Related Calculations
See how the deduction shrinks over time by checking the loan balance with the HELOC Calculator, or estimate the full carrying cost picture with the Property Tax Calculator.