The Good Brigade/Getty Images
Key takeaways
- The private mortgage insurance (PMI) deduction will be available again for homeowners in tax year 2026 — the first time since the end of 2021.
- The full PMI deduction will be available for homeowners earning less than $100,000 per year.
- Most borrowers pay mortgage insurance premiums when putting down less than 20 percent on a home.
Private mortgage insurance (PMI) has been tax deductible for homeowners off and on in recent decades. After expiring at the end of 2021, the deduction is set to be available again in tax year 2026 due to a provision in President Trump’s recently passed One Big Beautiful Bill Act. Read on to learn about how the deduction works and whether you’ll qualify for it.
Keep in mind:
When the deduction is available for filing in tax year 2026, PMI premiums will count as mortgage interest, which is capped at $750,000 for most homeowners.
Is mortgage insurance tax-deductible?
For now, no. You won’t be able to deduct the cost of your mortgage insurance premiums when you file a return for tax year 2025 — the same as it’s been since the deduction expired at the end of 2021.
That won’t be the case for long, though. Looking ahead, private mortgage insurance premiums will be tax-deductible beginning in tax year 2026.
When the private mortgage insurance deduction was previously available, the average deduction amount was $1,454, according to data from U.S. Mortgage Insurers.
What will the new PMI tax deduction requirements be?
When the changes go into effect, here’s a look at how the mortgage insurance deduction will work:
- Mortgage insurance premiums will be considered tax-deductible mortgage interest: If you itemize your deductions, you can deduct up to $750,000 of mortgage interest ($375,000 for married couples who file separately). The new law makes PMI premiums part of that deduction.
- You’ll need to be within annual income limits: Generally speaking, homeowners who earn less than $100,000 (adjusted gross income) will be able to deduct their mortgage insurance premiums. Once you cross that threshold, the benefit phases out.
How much can you save with the PMI tax deduction?
Homeowners typically pay between $30 and $70 a month in PMI premiums for every $100,000 of financing, according to Freddie Mac estimates. The premiums comprise part of your monthly repayments, along with the mortgage’s principal and interest. However, the size of the down payment, loan type and lender requirements can all affect your actual cost.
How much you can save depends on how much you owe and your tax bracket. Let’s say your adjusted gross income will be $100,000 and you will pay $120 per month in PMI premiums. Assuming you itemize deductions and that you can fully deduct all of the premiums, you would reduce your taxable income by $1,440.
How many people will be able to use the mortgage insurance tax deduction?
There’s no crystal ball for what the homeownership market will look like in tax year 2026, but historically, many have been able to qualify for the PMI tax deduction. Four million taxpayers took the deduction each year before it expired in 2021, according to the U.S. Mortgage Insurers.
PMI tax deduction FAQ
Why we ask for feedback
Your feedback helps us improve our content and services. It takes less than a minute to
complete.
Your responses are anonymous and will only be used for improving our website.
Help us improve our content
Read the full article here
