Sponsor
Julia Brownley
Representative · D-CA
The bill lets many homeowners deduct mortgage insurance premiums and lower their taxes starting in 2025, but it reduces federal revenue and adds tax-code complexity and administrative burden.
Homeowners who pay mortgage insurance (and some middle-class families who itemize) can deduct mortgage insurance premiums as qualified residence interest beginning with 2025 tax returns, lowering their taxable income and potentially reducing federal tax bills.
The expansion of deductible interest will reduce federal tax receipts, which could increase the federal deficit or require cuts/offsets to other government programs.
Taxpayers, tax preparers, and the IRS will face added complexity and administrative workload implementing the change for 2025 returns, likely increasing compliance costs and IRS processing burdens.
Based on analysis of 2 sections of legislative text.
Deletes a code exclusion so certain mortgage insurance premiums can be treated as qualified residence interest (deductible) for tax purposes.
Representative · D-CA
Official title: To amend the Internal Revenue Code of 1986 to make permanent the deduction for mortgage insurance premiums.
Introduced February 4, 2025 by Julia Brownley · Last progress February 4, 2025
Removes a statutory exclusion so that certain mortgage insurance premiums can count as "qualified residence interest" for federal income tax purposes. The change applies to amounts paid or accrued after December 31, 2024, effectively allowing more homeowners to treat mortgage insurance premiums like mortgage interest for deduction purposes beginning with the 2025 tax year. This is a narrow tax-code amendment that expands the set of deductible home-related interest expenses; it does not create a new program or direct spending and has limited administrative impact beyond tax filing and IRS processing rules.