Itemized vs. Standard Deduction: Mortgage Interest, SALT, and the 2026 Threshold

Mortgage interest helps you itemize only when it plus your other Schedule A deductions clears the standard deduction for your filing status. For 2026, that means beating $16,100 if you’re single, $24,150 as head of household, or $32,200 filing jointly.¹ Interest by itself almost never gets a homeowner there. The deduction becomes worth claiming when interest combines with property taxes, state income or sales taxes, and charitable gifts to push you past the standard deduction line.

The Number You Have to Beat in 2026

Start with your standard deduction. For tax year 2026 the amounts are $16,100 for single filers or married filing separately, $24,150 for head of household, and $32,200 for married couples filing jointly. These figures reflect the inflation adjustments under 26 U.S.C. § 63 as amended by the One, Big, Beautiful Bill Act, and they sit substantially higher than the numbers in effect a few years ago.¹ The higher the standard deduction, the more itemized expenses you need before the mortgage interest deduction pays off.

Filers 65 or older face an even taller wall. For 2025 through 2028, each qualifying individual adds $6,000 on top of the standard deduction. A married couple where both spouses are 65 or older starts from $44,200 before itemizing can win.² Older homeowners with paid-down mortgages generating modest interest usually save more with the standard deduction.

What Counts as Deductible Mortgage Interest

You can deduct interest on a loan used to buy, build, or substantially improve your main home or a second home, provided the loan is secured by the property. Those are the core requirements in 26 U.S.C. § 163(h).³

How much of that interest counts depends on when the loan closed. Mortgages taken out after December 15, 2017 qualify on the first $750,000 of debt, or $375,000 if you’re married filing separately. Older mortgages keep the $1,000,000 cap ($500,000 if married filing separately). The limit applies to the combined debt across your primary and second home, not each property on its own.⁴

Home equity loan and HELOC interest is deductible only if you used the money to improve the home securing the debt. Pulling equity to pay off credit cards or fund tuition produces no deduction.⁴

Points Paid at Closing

Points on a mortgage used to buy your main home are generally deductible in full the year you pay them. Each point equals 1% of the loan amount, and your lender reports them in Box 6 of Form 1098.⁵ Full first-year treatment requires that the loan be for your main home, that points be figured as a percentage of principal, that charging points be an established practice in your area, and that you brought enough of your own funds to closing to cover them.⁴

Points on a refinance usually have to be spread over the life of the new loan. The exception is the portion tied to substantial improvements, which can come off in the year paid. Points on a second home always stretch across the loan term.⁴

Mortgage Insurance Premiums

Beginning with the 2026 tax year, PMI premiums are again deductible as qualified residence interest. The deduction had lapsed after 2021 and was reinstated permanently by the One, Big, Beautiful Bill Act. Premiums of $600 or more show up in Box 5 of Form 1098.⁵ For buyers who put less than 20% down, adding PMI to interest can meaningfully lift the Schedule A total.

The Other Deductions That Make Itemizing Work

Mortgage interest rarely clears the standard deduction on its own. What usually pushes homeowners over the line is the state and local tax deduction sitting alongside it.

State and Local Taxes

Property taxes plus state income or sales taxes are deductible under 26 U.S.C. § 164, subject to a combined cap. For 2026 the SALT cap is $40,400, or $20,200 for married individuals filing separately.⁶ That’s a major jump from the $10,000 cap that applied through 2025, and it’s the single change that most improves the case for itemizing this year in high-tax states.

Higher earners see the cap phase down based on modified AGI, but it can’t drop below $10,000.⁷ Households well above $500,000 in income should expect a reduced SALT allowance closer to the old ceiling.

Charitable Contributions

Cash gifts to qualifying nonprofits and the fair market value of donated goods are deductible under 26 U.S.C. § 170.⁸ Any single contribution of $250 or more requires a written acknowledgment from the charity.

A new floor takes effect in 2026: the first 0.5% of your AGI in charitable giving produces no deduction. For a household with $150,000 in AGI, that’s $750 off the top before any donation counts.

Medical Expenses

Unreimbursed medical and dental costs are deductible above 7.5% of AGI under 26 U.S.C. § 213.⁹ A taxpayer with $100,000 AGI only counts costs above $7,500. Without a major medical event, this category adds little to the itemizing math.

Running the Math on Your Return

Add up your mortgage interest, deductible points, PMI, SALT (up to the cap), charitable gifts (above the 0.5% floor), and qualifying medical expenses. If the total beats your standard deduction, itemize. If not, take the standard deduction and file Schedule A next year if the picture changes.

Take a married couple filing jointly with $22,000 in mortgage interest, $14,000 in property and state income taxes, and $4,000 in charitable gifts. Their $40,000 itemized total beats the $32,200 standard deduction by $7,800. At a 22% marginal rate, itemizing saves them about $1,716.¹

Change the facts. A single filer with $9,000 of mortgage interest and $6,000 of SALT reaches $15,000. Add $500 in charitable gifts and the total is $15,500, still short of the $16,100 standard deduction. The mortgage interest produces no tax benefit at all. That’s where many homeowners with smaller or older mortgages land.

Purchase year is often the outlier. Points paid at closing, a full year of interest on a new (larger) balance, and prorated property taxes from settlement can lift you over the standard deduction even when ongoing years wouldn’t. Rerun the comparison every filing season rather than locking in one approach.

Married Filing Separately Has a Trap

If you file separately and one spouse itemizes, the other must itemize too.¹⁰ One spouse cannot take the standard deduction while the other files Schedule A. Combined with the reduced $375,000 mortgage cap and $20,200 SALT cap for separate filers, this can produce a higher joint tax bill than filing together would have. Run the numbers for both spouses before choosing separate returns.

Documentation and Penalty Risk

Every itemized category needs support. Your lender’s Form 1098 reports interest in Box 1, points in Box 6, and PMI in Box 5.⁵ Property tax figures come from the county statement or escrow summary. Charitable gifts need bank records or written acknowledgments.¹¹

Numbers on Schedule A should match these documents exactly. Overstating deductions through negligence or a substantial understatement of tax triggers an accuracy-related penalty of 20% of the underpayment. For individuals, a substantial understatement means tax was understated by the greater of 10% of the correct tax or $5,000.¹² Good records turn the comparison above into a defensible return.

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
2
Internal Revenue Service. Check Your Eligibility for the New Enhanced Deduction for Seniors
3
Office of the Law Revision Counsel. 26 USC 163 – Interest
4
Internal Revenue Service. Publication 936, Home Mortgage Interest Deduction
5
Internal Revenue Service. Instructions for Form 1098
6
Office of the Law Revision Counsel. 26 USC 164 – Taxes
7
Internal Revenue Service. Topic No. 503, Deductible Taxes
8
Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts
9
Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses
10
Internal Revenue Service. Other Deduction Questions
11
Internal Revenue Service. Instructions for Schedule A (Form 1040)
12
Internal Revenue Service. Accuracy-Related Penalty