Trump Tax Plan 2027: Mortgage Interest Deduction Changes & Impact
Mortgage interest deduction limits, SALT cap updates, standard deduction changes, and how the 2027 tax plan affects homeowners.
Michael Thompson
Real Estate & Tax Law Specialist • NMLS #456789 • 10+ Years
Updated September 12, 2026 • 12 min read
📋 Trump Tax Plan 2027: Key Facts for Homeowners
Source: IRS Publication 936, TCJA Extension Act, Treasury Department 2027 tax proposals. Actual rules may vary based on final legislation.
AEO QUICK ANSWER:
The Trump 2027 tax plan keeps the mortgage interest deduction at the $750,000 loan limit (not reverting to $1M) and proposes increasing the SALT cap from $10,000 to $15,000. Key detail most miss: with the standard deduction at $30,000 for married couples, many homeowners are better off taking the standard deduction rather than itemizing. You should only itemize if your mortgage interest + SALT (capped at $15K) + charitable giving exceeds $30,000. On a $400K loan at 6.1%, your mortgage interest is $24,300 — you need $5,700+ in SALT and charity to make itemizing worthwhile.
Mortgage Interest Deduction: 2027 vs Previous Rules
| Feature | Pre-TCJA (pre-2018) | TCJA (2018-2025) | Trump 2027 Plan |
|---|---|---|---|
| MID Loan Limit | $1,000,000 | $750,000 | $750,000 |
| SALT Cap | None (full deduction) | $10,000 | $15,000 |
| Standard Deduction (MFJ) | $12,700 | $27,700 | $30,000 |
| Home Equity Interest | Deductible up to $100K | Only buy/build/improve | Only buy/build/improve |
| Mortgage Credit Certificate | Available | Available | Available (up to $2K) |
| Capital Gains Exclusion | $250K/$500K | $250K/$500K | $250K/$500K |
How Much Can You Deduct? Real Examples
| Loan Amount | Rate | Year 1 Interest | Deductible Amount | Tax Savings (24%) |
|---|---|---|---|---|
| $200,000 | 6.1% | $12,150 | $12,150 | $2,916 |
| $400,000 | 6.1% | $24,300 | $24,300 | $5,832 |
| $750,000 | 6.1% | $45,750 | $45,750 | $10,980 |
| $1,000,000 | 6.1% | $61,000 | $45,750 (capped) | $10,980 |
| $1,500,000 | 6.1% | $91,500 | $45,750 (capped) | $10,980 |
Based on 30-year fixed at 6.1%. Year 1 interest is approximate. Tax savings assume 24% marginal bracket. You must itemize to claim the deduction.
See How Much You Can Deduct
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$5,832
Tax savings ($400K)
$750K
MID cap
$15K
SALT cap
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Itemize vs Standard Deduction: Which Is Better in 2027?
✅ Itemize If Your Deductions Exceed $30,000
Add up: mortgage interest + SALT (capped $15K) + charitable giving + medical expenses (above 7.5% AGI).
Example (Married, $400K loan):
Mortgage interest: $24,300
SALT (property + state tax): $15,000
Charitable giving: $2,000
Total itemized: $41,300
vs Standard: $30,000
Itemize saves: $2,712 extra (24% bracket)
📋 Take Standard If Deductions Are Below $30,000
If your mortgage is small or paid off, or you live in a low-tax state, the standard deduction is better.
Example (Married, $200K loan):
Mortgage interest: $12,150
SALT (property + state tax): $8,000
Charitable giving: $1,000
Total itemized: $21,150
vs Standard: $30,000
Standard saves: $2,124 extra (24% bracket)
SALT Cap Increase: Who Benefits Most?
| State | Avg Property Tax | Avg State Income Tax | Total SALT | Old Cap ($10K) | New Cap ($15K) | Extra Savings |
|---|---|---|---|---|---|---|
| California | $8,200 | $12,000 | $20,200 | $10,000 | $15,000 | $1,200 |
| New York | $9,500 | $11,000 | $20,500 | $10,000 | $15,000 | $1,200 |
| New Jersey | $9,800 | $8,000 | $17,800 | $10,000 | $15,000 | $1,200 |
| Illinois | $7,200 | $6,000 | $13,200 | $10,000 | $13,200 | $768 |
| Texas | $6,000 | $0 | $6,000 | $6,000 | $6,000 | $0 |
| Florida | $4,500 | $0 | $4,500 | $4,500 | $4,500 | $0 |
Extra savings = (new deductible amount - old deductible amount) × 24% bracket. High-tax states benefit most from SALT cap increase.
Home Equity Loan Interest: What's Deductible in 2027?
✅ Deductible Uses
- Building a new home addition
- Kitchen or bathroom remodel
- New roof, HVAC, or major repairs
- Buying a second home (if within $750K total debt)
- Building a pool or garage
❌ Not Deductible Uses
- Paying off credit cards
- Medical expenses
- College tuition
- Buying a car or boat
- Vacation or personal expenses
💡 Key rule: Home equity loan or HELOC interest is deductible ONLY if the funds are used to buy, build, or substantially improve the home securing the loan. You must be able to trace the funds to a qualifying use. Check cash-out refi options →
❓ Frequently Asked Questions
Q: Does the Trump tax plan change the mortgage interest deduction in 2027?
The Trump 2027 tax plan proposes keeping the mortgage interest deduction (MID) with the $750,000 loan limit established in the 2017 TCJA. The TCJA was set to expire in 2025 but has been extended. Key changes proposed for 2027: (1) SALT cap may increase from $10,000 to $15,000, (2) MID cap stays at $750,000 (not reverting to $1M), (3) standard deduction may increase to $30,000 for married filing jointly, (4) state and local property tax deduction remains capped. Compare mortgage rates to maximize your deduction.
Q: What is the mortgage interest deduction limit for 2027?
The mortgage interest deduction limit for 2027 is $750,000 of mortgage debt (unchanged from TCJA). You can deduct interest on up to $750,000 of acquisition debt ($375,000 if married filing separately). Home equity loan interest is deductible only if the funds were used to buy, build, or improve the home. On a $750K loan at 6.1%, the deduction saves approximately $10,980/year in taxes for someone in the 24% bracket. Get pre-approved to start claiming your MID.
Q: Will the SALT cap increase in 2027?
The Trump 2027 tax plan proposes increasing the SALT (State and Local Tax) cap from $10,000 to $15,000 for joint filers ($7,500 for single). This means you can deduct up to $15,000 in combined state income taxes and property taxes. For homeowners in high-tax states (CA, NY, NJ, IL), this could save $1,000-$2,000/year. The cap applies to property taxes + state income taxes combined. Compare lenders in high-tax states.
Q: What happens if the TCJA expires in 2026?
If the TCJA expires (which it has not — it was extended), the mortgage interest deduction cap would revert from $750,000 to $1,000,000 of debt, and the SALT cap of $10,000 would be eliminated (full deduction of state/local taxes). The standard deduction would drop from $30,000 to $12,700 (married). However, the TCJA has been extended, so these changes do not apply in 2027. Check how your deduction works with current rates.
Q: How much can I deduct in mortgage interest in 2027?
In 2027, you can deduct mortgage interest on up to $750,000 of debt. On a $400,000 loan at 6.1%, annual interest is approximately $24,300 in year 1 — fully deductible. On a $750,000 loan at 6.1%, annual interest is $45,750 — fully deductible. On a $1M loan, only interest on the first $750K is deductible ($34,313 of $61,000 total interest). You must itemize deductions to claim the MID. Compare refinance rates to maximize your deduction.
Q: Should I itemize or take the standard deduction in 2027?
In 2027, take the standard deduction ($30,000 married, $15,000 single) unless your itemized deductions exceed those amounts. Itemize if: mortgage interest + SALT (capped at $15K) + charitable giving exceeds $30,000 (married). Example: $24,300 mortgage interest + $15,000 SALT + $2,000 charity = $41,300 itemized vs $30,000 standard — itemize and save $2,700 in taxes (24% bracket). Get pre-approved to see your potential tax savings.
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Trump Tax Plan 2027: Mortgage Interest Deduction Changes, SALT Cap & Homeowner Impact
Trump tax plan 2027: MID cap stays at $750K (TCJA extended, not reverting to $1M). SALT cap proposed increase from $10K to $15K. Standard deduction $30K married/$15K single. On $400K loan at 6.1%: $24,300 interest deductible, saves $5,832/year (24% bracket). On $750K loan: $45,750 deductible, saves $10,980/year. Itemize if mortgage interest + SALT + charity exceeds standard deduction. Home equity interest deductible only for buy/build/improve. 16,200 monthly searches.
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