Major Homeowner Tax Deduction Changes for 2025 Taxes (Filed in 2026)

Several important tax law updates could significantly benefit homeowners for the 2025 tax year, with returns filed in 2026. These changes stem from the One Big Beautiful Bill Act, which expanded or reinstated key deductions many homeowners rely on.

If you own a home or are planning to buy one, these updates are worth understanding before you file.

Key Homeowner Tax Deduction Updates

State and Local Tax (SALT) Deduction Cap Increased

One of the most impactful changes is the expansion of the SALT deduction cap.

For tax years 2025 through 2029, homeowners can deduct substantially more in combined state and local taxes, including property taxes.

New SALT deduction limits:

$40,000 for single filers $40,000 for heads of household $40,000 for married couples filing jointly $20,000 for married couples filing separately

This is a major increase from the previous $10,000 cap and may especially benefit homeowners in higher property tax states.

Private Mortgage Insurance (PMI) Deduction Reinstated

The deduction for Private Mortgage Insurance (PMI) and FHA Mortgage Insurance Premiums (MIP) is officially returning.

This deduction applies beginning with the 2026 tax year, which means it will be claimed on returns filed in 2027 It had previously expired and was unavailable to many homeowners in recent years

This change may benefit buyers who put down less than 20 percent and are paying PMI or MIP as part of their monthly mortgage payment.

Standard Deduction Increased

While not specific to homeowners, the higher standard deduction may influence whether itemizing deductions makes sense.

For tax year 2025, the standard deduction amounts are:

$31,500 for married filing jointly $15,750 for single filers $23,625 for heads of household

Homeowners should compare their total itemized deductions, including mortgage interest, property taxes, and charitable contributions, against these higher thresholds.

Deductions and Credits That Remain Available

Mortgage Interest Deduction

The Mortgage Interest Deduction remains unchanged and permanent.

Homeowners may deduct interest on up to:

$750,000 of qualified home acquisition debt

This includes loans used to buy, build, or substantially improve a primary or secondary residence.

Energy Efficient Home Improvement Credits

Tax credits for qualifying energy-efficient upgrades remain available through December 31, 2025.

Homeowners may claim up to $3,200 per year, including:

Up to $2,000 for heat pumps and similar systems Up to $1,200 for improvements such as windows, doors, and insulation

Eligibility depends on specific product requirements outlined by Energy Star.

Final Thoughts

These expanded and reinstated deductions could create meaningful tax savings for homeowners, especially those with higher property taxes or mortgage insurance.

Because tax situations vary widely, it is always wise to consult a qualified tax professional or reference official guidance from the Internal Revenue Service to determine the best strategy for your household.