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The bill reduces taxes for homeowners who pay mortgage insurance by allowing those premiums to be deducted as mortgage interest, but it lowers federal revenue and creates additional implementation and compliance burdens.
Homeowners who pay mortgage insurance (including many middle-class itemizers) can deduct those premiums as qualified residence interest beginning in 2025, lowering taxable income and reducing federal tax bills for affected filers.
All taxpayers: expanding the mortgage interest deduction will reduce federal tax receipts, which could modestly increase the deficit or require cuts or offsets to federal programs and services.
Taxpayers who claim the deduction and tax preparers: implementing the change for 2025 returns will add complexity and IRS workload, raising compliance costs and causing potential short-term filing confusion.
Based on analysis of 2 sections of legislative text.
Removes a statutory exclusion so mortgage insurance premiums can be treated as deductible qualified residence interest for amounts paid or accrued after Dec 31, 2024.
Introduced February 4, 2025 by Julia Brownley · Last progress February 4, 2025
Removes a statutory exclusion so that mortgage insurance premiums can count as deductible qualified residence interest for federal income tax purposes. The change applies to amounts paid or accrued after December 31, 2024, expanding which mortgage-related payments homeowners may deduct. Homeowners who pay private mortgage insurance (PMI) or other mortgage insurance may see lower taxable income beginning with 2025 payments. The change alters the definition of qualified residence interest in the Internal Revenue Code and may have modest revenue effects for the federal government.