How Did Tax Reform Change the Mortgage Interest Deduction?

Tax reform increased the standard deduction that taxpayers can claim when filing their national income taxes. The mortgage interest deduction is only available when taxpayers itemize their deductions and list specific deductions, such as mortgage interest.

The mortgage interest deduction is therefore not available to taxpayers claiming the standard deduction. In addition, because the standard deduction is much higher after tax reform, it may not be as helpful for taxpayers to itemize. Thus, tax reform may have decreased the amount that a taxpayer can save by claiming the mortgage interest deduction.

Tellus TIP:

When filing your taxes, check carefully how much you save when applying the standard deduction versus the itemized deduction, taking into account all of the various deductions you might get when itemizing. It may still be beneficial overall to itemize, but the benefits you get for itemizing instead of choosing the standard deduction will be smaller than they were because of the big increase in standard deduction.