Homeowners: Tax Deductions to Know This Season
As tax season begins, homeowners across the U.S. are reviewing what deductions they can claim. The IRS will start accepting returns on January 26.
A homeowner’s deductions depend on income, location, and other factors. “Everyone’s situation is different,” said Kate Wood, lending expert at NerdWallet. “It depends on your income and where you live.”
Being prepared can save you money.
Mortgage Interest Remains Key
The mortgage interest deduction continues to be one of the biggest breaks for homeowners. However, fewer taxpayers claim it since the 2017 Tax Cuts and Jobs Act nearly doubled the standard deduction.
Filers who itemize can deduct mortgage interest, state and local taxes, and charitable donations if the total exceeds the standard deduction. For 2025, the standard deduction is $15,750 for singles and $31,500 for married couples filing jointly.
Mortgage debt up to $750,000 is deductible, or $375,000 for married couples filing separately.
Other Common Deductions
Homeowners may also qualify for:
- Home equity loan or HELOC interest: Deductible only if used for qualifying home improvements. Consolidating other debt does not qualify.
- Home office expenses: Self-employed taxpayers can deduct business-related home expenses, such as utilities and property taxes. W-2 employees working from home cannot.
- Medically necessary home improvements: Costs for adaptations like wheelchair ramps or health equipment are deductible.
What’s New This Year
Two key changes affect homeowners in 2026:
- Higher SALT Deduction: The “big, beautiful bill” act raised the state and local tax (SALT) deduction cap from $10,000 to $40,000. This applies to combined property taxes and either state income or sales taxes. The deduction phases out above $500,000 in adjusted gross income. Benefits vary depending on mortgage size, property taxes, and location.
- End of Energy Improvement Credits: Tax credits for energy upgrades, such as solar panels or insulation, ended in 2025. Homeowners can only claim credits for work completed by December 31, 2025.
Should You Itemize or Take the Standard Deduction?
If you have a high mortgage, pay significant property taxes, or live in a high-tax area, itemizing could increase your deductions. For smaller mortgages or lower taxes, the standard deduction may be simpler and just as valuable.
