Tax Refund Calculator — Mortgage Deduction Angle
The 2026 standard deduction is $16,100 (single) or $32,200 (married). Most homeowners no longer itemize — but a large mortgage plus capped SALT can still beat it. This calculator shows your best path and the real tax value of your home loan.
This is the annual tax value of your mortgage interest and other itemized deductions — your refund is larger by roughly this amount vs taking the standard deduction.
2026 IRS figures: standard deduction $16,100 single / $32,200 joint. SALT capped at $10,000. Mortgage interest deductible on up to $750,000 of acquisition debt.
Marginal rate is a simplified 2026 bracket estimate — your exact rate depends on all income and credits. Not tax advice; consult a professional.
Methodology & Assumptions
How this calculator works, what it assumes, and where it falls short. Every calculator on TruePITI documents its math.
Formula
- Deduction = max(standard 2026, itemized). Itemized = mortgage interest (≤ $750K loan) + min(SALT, $10,000) + charity + other. Tax saved = (deduction − standard) × marginal rate (simplified 2026 brackets).
Assumptions
- 2026 standard deduction: $16,100 single / $32,200 joint (IRS, post-OBBB).
- SALT cap $10,000 (current law); mortgage interest capped at $750,000 acquisition debt.
- Marginal bracket estimated from 2026 IRS brackets — simplified, ignores credits and AMT.
Limitations
- Actual refund depends on withholding — this estimates the deduction's value, not your exact refund.
- High-income filers may face AMT and phaseouts that reduce itemized benefits.
- State tax treatment of mortgage interest differs — this is federal only.
Worked Example
- Married couple, $220K income, $18,000 mortgage interest, $12,000 SALT, $3,000 charity: itemized = 18,000 + 10,000 (capped) + 3,000 = $31,000 — just under the $32,200 standard, so itemizing loses. A $700K loan at 6.625% (about $46,000 year-1 interest) would push itemized to ~$59,000 and save roughly $6,400 at the 24% bracket.
Sources
- IRS — Tax inflation adjustments for 2026
- IRS — Topic 504, home mortgage interest deduction
Tax Refund FAQ
Should I itemize or take the standard deduction in 2026?
Itemize only if your itemized total exceeds $16,100 (single) or $32,200 (married). With the $10,000 SALT cap, a couple needs roughly $22,000+ of mortgage interest plus capped SALT to beat the standard deduction — that means about a $400,000+ loan at current rates. Most homeowners with smaller loans take the standard deduction.
How much does mortgage interest save on taxes?
Each $1 of deductible mortgage interest saves your marginal rate — 22-24% for most filers. On a $500,000 loan at 6.625%, year-1 interest is about $33,000; if you itemize, that saves roughly $7,300-7,900 versus not having the deduction. The catch: you must beat the standard deduction first.
What is the SALT cap and how does it affect homeowners?
The SALT (state and local tax) deduction — property tax plus state income tax — is capped at $10,000 per return. A Texas homeowner paying $8,000 property tax plus a California filer paying $20,000 state tax both deduct only $10,000. This cap is why many homeowners no longer itemize.
What loan amounts keep the mortgage interest deduction?
Interest is deductible on up to $750,000 of acquisition debt for loans taken after December 15, 2017 (down from $1,000,000). A $900,000 loan means interest on the first $750,000 is deductible; the rest is not. Refinances inherit the original loan limit.
Does the mortgage interest deduction still matter in 2026?
Less than before the 2017 tax law, but it matters for large loans, high-tax states, and charitable givers. A couple with a $700K loan at 6.625% (about $46,000 year-1 interest) plus $10,000 capped SALT itemizes comfortably and saves roughly $10,000-11,000 at the 24% bracket versus a renter taking the standard deduction.
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Last updated: 2026-09-16 | Estimates only — not tax advice. Consult a tax professional for your specific situation.