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Mortgage Interest Deduction Calculator

The real tax benefit of mortgage interest. Only the amount by which itemised deductions exceed the standard deduction saves anything, so the benefit is far smaller than the interest times the tax rate.

Also called: home mortgage interest deduction, mortgage tax benefit.

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Actual tax benefit
$8,952.00

$8,952.00 a year, not $9,672.00. Interest of $40,300.00 is deductible, but only $37,300.00 of your itemised total exceeds the standard deduction, and only that excess produces any benefit. The whole balance is within the deductible debt limit.

Annual mortgage interest
$40,300.00
Deductible portion
$40,300.00
If every dollar counted
$9,672.00
Itemised total above the standard deduction
$37,300.00
Effective mortgage rate after the deduction
5.06%
On the debt limit
The whole balance is within the deductible debt limit.
How this is calculated

Computed from the published rates for the tax year you selected, which is not necessarily the current year. A calculation, not tax advice, and it does not know anything about your circumstances beyond the figures entered.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

Interest on acquisition debt up to the statutory limit is deductible, and interest on the balance above it is not. The important step, which most calculations skip, is that itemising only helps to the extent it beats the standard deduction. If your total itemised deductions barely exceed it, almost none of the mortgage interest produces a benefit. The effective rate after the deduction is shown for the same reason: it is usually much closer to the nominal rate than people assume.

only the itemised total above the standard deduction produces any benefit
t
Marginal rate

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

a 620,000 mortgage

Mortgage balance
$620,000.00
Interest rate
6.5%
Deductible debt limit
$750,000.00
Other itemised deductions
$12,000.00
Standard deduction
$15,000.00
Marginal rate
24%

Actual tax benefit$8,952.00

Only 37,300 of the 52,300 itemised total beats the standard deduction

Open this example

a balance above the limit is partly non-deductible

Mortgage balance
$1,000,000.00
Interest rate
6.5%
Deductible debt limit
$750,000.00
Other itemised deductions
$12,000.00
Standard deduction
$15,000.00
Marginal rate
24%

Actual tax benefit$10,980.00

boundary: 750/1000 of the interest

Open this example

no mortgage means no benefit

Mortgage balance
$0.00
Interest rate
6.5%
Deductible debt limit
$750,000.00
Other itemised deductions
$12,000.00
Standard deduction
$15,000.00
Marginal rate
24%

Actual tax benefit$0.00

degenerate case

Open this example

Method and limits

What it assumes

  • Interest computed on the current balance for a full year.

What it deliberately does not model

  • The debt limit differs for mortgages taken before the current rules and for married filing separately.
  • Only acquisition debt qualifies. Cash-out proceeds used for other purposes generally do not.
  • This is a comparison, not tax advice.

Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator

Frequently asked questions

Does my mortgage really save me the interest times my tax rate?
No. Only the part of your itemised deductions that exceeds the standard deduction saves anything. For many filers that is a small fraction of the interest, and for some it is nothing at all.