Most homeowners cannot deduct mortgage interest if they take the standard deduction on their federal tax return.
The mortgage interest deduction is only available when you itemize deductions instead of taking the standard amount. According to IRS data, the share of taxpayers who itemize (and thus deduct mortgage interest) plummeted from 31% in 2017 to around 9% in recent years, after tax law changes greatly increased the standard deduction. In other words, the vast majority of taxpayers now claim the one-size-fits-all standard deduction – meaning they don’t get a separate tax break for home mortgage interest on their federal return. Below, we’ll explore the full context, exceptions (like certain state tax rules), and smart strategies around this question.
- 🧐 Straight answer upfront: Whether you can write off mortgage interest with the standard deduction (and the one big exception to the rule)
- 💡 Why only ~1 in 10 taxpayers now itemize their deductions – and what that means for your mortgage interest tax break
- ⚖️ How federal vs. state tax laws differ: Some states let you deduct mortgage interest even if you take the federal standard deduction
- 📊 When itemizing actually pays off vs. when the standard deduction saves more: Real-life examples and a handy pros-and-cons chart for homeowners
- 🚫 Biggest mistakes to avoid: From “double-dipping” on deductions to missing out on a state tax benefit – and how to sidestep these pitfalls
Direct Answer: Why You Can’t Deduct Mortgage Interest with a Standard Deduction
In a nutshell, you cannot deduct your mortgage interest if you opt for the standard deduction on your federal taxes. The U.S. tax system gives you a choice each year: take the standard deduction (a fixed dollar amount based on your filing status), or itemize deductions (list out actual deductible expenses like mortgage interest, property taxes, charitable contributions, etc.). You can’t do both – it’s one or the other. If you claim the standard deduction, you are forfeiting individual write-offs such as the home mortgage interest deduction for that tax year.
Why is that the case? The mortgage interest deduction is classified as an “itemized deduction.” It’s claimed on Schedule A of your Form 1040, alongside other itemized expenses. Taking the standard deduction means you don’t file Schedule A at all, so there’s no place to claim mortgage interest. The IRS doesn’t allow “partial itemizing” on top of the standard deduction – it’s essentially an either/or choice designed to simplify tax filing.
Example: Suppose you paid $8,000 in mortgage interest for the year. If you also have other deductible expenses but the total falls short of your standard deduction (for example, $14,600 for a single filer in 2024), you’d take the standard deduction and none of that $8,000 of interest would be separately deducted.
The standard deduction already provides a larger tax reduction in that case, so itemizing wouldn’t benefit you. Conversely, if your deductible mortgage interest and other expenses are higher than the standard amount, you’d itemize and claim those expenses instead of the standard deduction.
There is one key exception to be aware of: while you cannot deduct mortgage interest on your federal return when taking the standard deduction, some U.S. states have different rules. Certain states allow you to itemize on your state income tax return even if you took the federal standard deduction.
This means that at the state tax level, you might still deduct mortgage interest (and other itemized expenses) despite using the standard deduction federally. We’ll cover these state-by-state variations in detail later on. But for federal income tax purposes, the direct answer is clear: choosing the standard deduction means you won’t get a separate deduction for mortgage interest on that year’s federal tax filing.
Mistakes to Avoid: Common Deduction Pitfalls 🛑
When navigating mortgage interest and deductions, taxpayers often slip up in a few predictable ways. Here are the top mistakes to avoid:
Mistake 1: Trying to “double-dip” – Attempting to claim the standard deduction and also deduct mortgage interest. This is not allowed. If you take the standard deduction, you cannot separately deduct any itemized expenses like mortgage interest or property taxes. Some filers mistakenly list mortgage interest on Schedule A and take the standard deduction, which will flag an error with the IRS.
Avoidance tip: Decide upfront which route to take. If your total itemized expenses (including mortgage interest) don’t exceed your standard deduction amount, take the standard deduction and don’t enter itemized write-offs on your federal return.
Mistake 2: Leaving money on the table at the state level – Forgetting that your state taxes might allow a different deduction choice. As mentioned, several states let you itemize on the state return even if you took the federal standard. A common blunder is assuming you must do the same on state as federal. For example, if you live in California or New York and have significant mortgage interest, you could potentially itemize for state taxes to deduct that interest, even though you claimed the standard deduction federally.
Avoidance tip: Check your state’s tax rules (or tax software settings). If your state allows, be sure to itemize on the state return to deduct mortgage interest and other expenses there – otherwise you might miss out on a state tax break.
Mistake 3: Itemizing when it’s not beneficial – Forcing itemized deductions when the standard deduction is higher. Some homeowners feel they “should” claim the mortgage interest deduction because they have a home loan, even if their deductible expenses are too low. They end up itemizing a bunch of expenses (mortgage interest, taxes, etc.) that total less than the standard deduction – resulting in a smaller deduction than they could have had.
Avoidance tip: Always run the numbers. Compare your standard deduction to your would-be itemized total. If itemizing doesn’t exceed the standard, don’t do it. You’re better off with the guaranteed larger standard deduction in that case.
Mistake 4: Ignoring special rules for married filing separately – Married couples filing separate returns face stricter rules. If you are Married Filing Separately (MFS) and your spouse itemizes deductions, you are not allowed to take the standard deduction – you must itemize as well (or take a $0 standard deduction). Conversely, if one spouse takes the standard deduction, the other cannot itemize. This prevents couples from splitting strategies to maximize benefits.
Avoidance tip: Coordinate with your spouse. Generally, if you’re filing separately, either both of you itemize or both take standard – whichever yields the best combined outcome. Don’t attempt one of each, or the IRS will disallow the itemized deductions of the one who tried.
Mistake 5: Misunderstanding what’s deductible – Assuming all mortgage payments or related costs are deductible. Only the interest portion of your mortgage payments (and certain related charges like points paid, in some cases) is deductible as an itemized expense – and only on qualifying loans for your main or second home. Your principal repayments are never deductible. Also, interest on home equity loans is deductible only if the loan was used to buy/build/improve the home (and subject to the same total debt limit).
Some taxpayers also confuse property taxes or private mortgage insurance (PMI) with mortgage interest – property taxes are a separate itemized deduction (capped at $10,000 with other state/local taxes), and PMI deductibility has been on-again/off-again (check current law).
Avoidance tip: Read your Form 1098 from the lender, which reports the exact mortgage interest paid. Only claim that amount (plus any allowed points or qualified mortgage insurance if applicable) on Schedule A – and only if you’re itemizing.
By steering clear of these mistakes, you’ll file a more accurate return and maximize your tax benefits where possible.
Real-Life Scenarios: Examples of Standard vs. Itemized Deduction Decisions
How does this play out for typical homeowners? Let’s look at a few real-life scenarios to illustrate when you would or wouldn’t deduct mortgage interest:
Scenario 1: New homeowner with modest mortgage – standard deduction wins
Emily is a first-time homebuyer, single, with a 30-year mortgage. In 2024, she pays $6,500 in mortgage interest and has about $3,000 in property taxes and $1,000 in charitable donations. All together, her itemized deductions would be roughly $10,500. That’s below the standard deduction for a single filer (which is $14,600 for 2024). Emily opts for the standard deduction.
She cannot deduct her $6,500 of interest separately – but that’s okay, because the standard deduction gives her a larger tax break than itemizing would. In effect, the standard deduction “covers” her mortgage interest and then some. She keeps her tax filing simple and still comes out ahead.
Scenario 2: Long-time homeowners with big mortgage and high taxes – itemizing pays off
Raj and Priya are a married couple with a sizable mortgage on their home. In 2024, they pay $18,000 in mortgage interest. They also pay $10,000 in combined property and state income taxes (the maximum deductible under the federal SALT cap) and make $5,000 in charitable donations. These itemized expenses sum up to $33,000.
The standard deduction for Married Filing Jointly is $29,200 in 2024. Since $33,000 > $29,200, it benefits Raj and Priya to itemize deductions. By itemizing, they can deduct their $18,000 of mortgage interest (along with the taxes and charity) on their federal return, reducing their taxable income more than the standard deduction would. In this scenario, itemizing clearly saves them money on taxes. If they had taken the standard deduction, they would have lost out on deducting that extra $3,800 of expenses above the standard amount.
Scenario 3: Federal standard deduction + state itemized deduction
Carlos owns a home in a state with an income tax (let’s say California). For 2025, his total itemized deductions (including mortgage interest) come to $20,000. The federal standard deduction for him (single filer) is $15,000 in 2025 – meaning his itemized expenses are not quite high enough to beat the standard at the federal level. Carlos decides to take the federal standard deduction to maximize his federal tax savings.
However, California’s state standard deduction is much lower (around $5,500 for single filers) and state law allows him to itemize on his state return even though he took the standard federally. On his California state income tax return, Carlos chooses to itemize. He lists his $20,000 of deductions (including mortgage interest) for California purposes, which far exceeds the $5,500 state standard deduction.
The result: Carlos gets the best of both worlds – the large federal standard deduction and a substantial deduction for mortgage interest and other expenses on his state taxes. If he had assumed he must also take the state standard deduction, he would have overpaid his state taxes. This scenario highlights why knowing your state’s rules is important.
Each homeowner’s situation is unique. The general pattern: if your mortgage interest and other deductible expenses are below your standard deduction, you’ll take the standard (and thus not deduct the interest that year). If those expenses are above the standard, you’ll itemize (and deduct the interest, along with everything else). And if you’re in a state with flexible rules, you might do a mix – standard for federal, itemize for state. It’s wise to re-evaluate this decision every year, since changes in your life (buying a new house, paying off a mortgage, changes in tax law, etc.) can swing the math one way or the other.
IRS Guidance & Evidence: What the Official Rules Say 📜
The IRS has set clear guidelines in the tax code and publications regarding mortgage interest and the standard deduction. In summary, the Internal Revenue Code (IRC) and IRS instructions affirm that mortgage interest is deductible only if you itemize on Schedule A. Here are some key pieces of official evidence and guidance:
- IRS Form 1040 and Schedule A: On the standard Form 1040, there’s a line to enter your standard deduction or itemized deduction total – one or the other. Schedule A (Itemized Deductions) is a separate form where you list things like home mortgage interest (Line 8 on Schedule A), property taxes, medical expenses, etc. If you take the standard deduction, you don’t attach Schedule A, and thus there’s no place to claim your mortgage interest. The tax form itself enforces the rule – it’s structurally impossible to claim itemized write-offs when you’ve selected the standard deduction.
- IRS Publication 936 – Home Mortgage Interest Deduction: This is the IRS’s dedicated guide explaining the mortgage interest deduction. Pub. 936 spells out that to deduct home mortgage interest, you must meet the criteria for itemizing. It details the limits (such as the $750,000 loan principal cap on deductible interest for mortgages originated after 2017) and provides worksheets. The very first requirement it notes is that you should be filing Schedule A for the year in question.
- IRS Publication 17 – Your Federal Income Tax (for Individuals): Pub. 17 is a general tax guide. In the section on the standard deduction vs. itemized deductions, it explicitly states that you generally cannot claim any itemized deduction if you choose the standard deduction. Mortgage interest, being one of the largest itemized deductions for many, is used as a primary example in illustrating this trade-off.
- Tax Code (IRC §163): The authority for deducting interest (including home mortgage interest) comes from Section 163 of the Internal Revenue Code. Personal interest was largely disallowed by Congress in the late 1980s, with an exception for “qualified residence interest” (interest on a home mortgage) which Congress preserved as an itemized deduction.
- The code specifies that qualified residence interest is deductible only in the context of itemized deductions (subject to the limits mentioned). This has been reinforced by subsequent laws, including the Tax Cuts and Jobs Act of 2017, which didn’t change the fundamental requirement to itemize (it only altered the dollar limits and increased the standard deduction to make itemizing less common).
- IRS Q&A and Tax Court rulings: On the IRS website’s FAQ section and in past tax court cases, the message is consistent: if you take the standard deduction, you cannot also deduct specific expenses like mortgage interest, because those are part of itemized deductions. There’s no loophole to claim them elsewhere on the return. (One narrow exception: if part of your mortgage interest is for a business or rental portion of your home, that portion might be deductible on a business schedule – but that’s beyond the scope of personal itemized deductions and the standard deduction. For personal taxes, the rule stands firm.)
In short, IRS guidance backs up what we’ve discussed: on your federal tax return, mortgage interest is only deductible via itemizing. The IRS expects you to choose the deduction method that benefits you (standard or itemized) but doesn’t allow mixing methods. Understanding these rules straight from the source helps underscore why, for most people, the standard deduction and mortgage interest deduction are mutually exclusive in a given year.
Comparisons: Standard vs. Itemized Deductions in Different Scenarios
To solidify our understanding, let’s compare several aspects of taking the standard deduction versus itemizing with a mortgage interest deduction. Below are a few comparison tables that break down common situations, federal vs. state rules, and the pros and cons of each approach:
Common Homeowner Scenarios – Standard Deduction or Itemize?
Sometimes it’s tricky to know which deduction route will save you more. Here are some typical taxpayer scenarios and whether itemizing (deducting mortgage interest) or taking the standard deduction tends to be beneficial:
| Taxpayer Scenario | Better Off Taking Standard or Itemizing? |
|---|---|
| Renter or new homeowner with small mortgage – e.g. limited mortgage interest and few other deductions. | Standard Deduction. Likely no benefit from itemizing since total itemized won’t exceed standard. |
| Homeowner with substantial mortgage interest – and moderate property taxes/charities, close to standard deduction amount. | Borderline – Calculate Both. If itemized deductions are near the standard deduction, compare values; itemize only if it’s higher. Often the standard still wins unless other items push it over. |
| High-income homeowner in high-tax area – large mortgage interest, maxed-out $10k SALT taxes, big charitable donations. | Itemize Deductions. Total itemized likely exceeds standard deduction, so itemizing (including mortgage interest) yields a lower tax bill. |
| Senior homeowner with a paid-off (or small) mortgage – minimal interest but possibly using higher standard deduction for age. | Standard Deduction. Without hefty interest, they’ll use the standard deduction (which is even larger if over 65), as itemizable expenses are too low. |
In practice, always crunch the numbers for your situation. These scenarios illustrate general trends – the “break-even” point for itemizing will depend on the exact amounts of your deductible expenses versus the standard deduction for your filing status.
Federal vs. State: Deductibility of Mortgage Interest
As discussed, federal law and state tax laws don’t always align on this issue. Here’s a federal vs. state comparison of mortgage interest deductibility when the standard deduction is taken federally:
| Federal Tax (IRS) | State Income Tax (varies by state) |
|---|---|
| Standard vs. Itemized: Must choose one. If you take the federal standard deduction, you cannot deduct mortgage interest on your federal return. To deduct it, you’d have to itemize federally. | Many states allow a different choice. Some states let you itemize on the state return even if you took the federal standard deduction. This means you could deduct mortgage interest on your state taxes while using the standard deduction federally. |
| Examples: All U.S. taxpayers face this rule under federal law (no mixing standard and itemized). The standard deduction amounts are high ($13k-$29k+ range), causing only ~10% to itemize. | Examples: California and New York allow independent itemizing – you can claim state itemized deductions (including mortgage interest) even with a federal standard deduction. In contrast, Virginia and Georgia (among others) require you to follow your federal choice – if you took federal standard, you must take the state standard (no state mortgage interest deduction in that case). |
| Impact: If you claim the standard deduction federally, your mortgage interest deduction is simply unused (though not “lost” forever – each tax year stands alone). You might have a great federal outcome but no federal mortgage write-off. | Impact: Depending on your state, you might salvage a tax break for your mortgage interest at the state level. Where allowed, itemizing for state can lower your state taxable income. In states that don’t allow it, you’re in the same boat at the state level – standard deduction with no itemized state deductions that year. |
Always check your state’s tax rules or consult a tax professional. State laws vary widely: roughly half the states offer flexibility to itemize separately, while others tie your hands to the federal method. And a few states have no income tax at all – in those, the mortgage interest question is moot for state taxes.
Pros and Cons: Standard Deduction vs. Itemizing (Mortgage Interest)
What are the advantages and disadvantages of taking the standard deduction versus itemizing to deduct mortgage interest? The table below sums up the key pros and cons for homeowners:
| ✅ Pros of Taking the Standard Deduction | ❌ Cons (Trade-offs) of Taking the Standard Deduction |
|---|---|
| Simplicity & Speed: Filing taxes is easier – no need to track every expense or keep as many records. You claim one lump-sum deduction and you’re done. | No Specific Tax Break for Mortgage: You forgo the mortgage interest deduction (and other itemized breaks) for that year. Even if you paid interest, it doesn’t reduce your federal tax if you use the standard deduction. |
| Often Larger Deduction: Especially after recent tax law changes, the standard deduction is large enough that many taxpayers get a bigger reduction than if they itemized. This means more money in your pocket if your itemized expenses are low or moderate. | Potentially Higher Tax Bill if You Have Large Deductions: If you have very high mortgage interest or other deductible expenses, the standard deduction could be lower than what you’d get by itemizing – costing you extra taxes. (You might overcome this by choosing to itemize in those years.) |
| Avoids AMT Complications: Itemized deductions like state/local taxes can trigger or increase Alternative Minimum Tax implications for some high-income filers. The standard deduction isn’t allowed under AMT, but if you’re using it because itemized is lower, you’re likely not in AMT range anyway. Simpler in any case. | No Reward for Homeownership (Tax-Wise): Some homeowners feel the standard deduction doesn’t “reward” them for their mortgage interest, property taxes, etc. The psychological con: you don’t see a tax benefit from owning (aside from home equity buildup), whereas itemizers do see tax savings tied to those payments. |
| Automatic Benefit for Low/No-Interest Situations: If your mortgage is paid off or interest is very low (and you have few other deductions), the standard deduction ensures you still get a decent write-off amount regardless. | Lost Itemizable Credits in Some States: In states requiring the same deduction method as federal, taking the federal standard means you can’t deduct those items on your state return either. This can sting in high-tax states where you would have itemized if allowed. |
It’s all about weighing the trade-offs. The standard deduction is usually best for those with smaller mortgages or limited deductions, offering ease and often a bigger tax cut. Itemizing (claiming the mortgage interest deduction and others) makes sense when you have enough deductible expenses to surpass the standard amount – it rewards larger homeowners expenses but comes with added complexity. Each option has its merits, and the “right” choice can change from year to year.
Key Entities & Definitions: Tax Terms You Should Know
To navigate this topic confidently, it helps to understand the key tax terms and entities involved. Here’s a quick glossary of important concepts we’ve touched on:
- Standard Deduction: A flat amount that taxpayers can subtract from their income, no questions asked. It varies by filing status and is adjusted for inflation each year. For example, the federal standard deduction for 2024 is $14,600 for single filers and $29,200 for married joint filers (rising to $15,000 and $30,000 in 2025). If you take the standard deduction, you cannot claim itemized deductions on your return. The standard deduction was almost doubled by the 2017 Tax Cuts and Jobs Act, which is why so many more people use it now instead of itemizing.
- Itemized Deductions: These are specific eligible expenses that you can deduct from your income in lieu of the standard deduction. Common itemized deductions include home mortgage interest, property taxes and state income taxes (subject to the $10,000 SALT cap), charitable contributions, medical expenses above certain thresholds, and more. You report itemized deductions on Schedule A of your tax return. The sum of all your itemized deductions is then subtracted from your income, instead of the standard deduction. You would choose to itemize only if this sum is greater than your standard deduction. Itemizing requires more record-keeping (receipts, Form 1098 for mortgage interest, etc.), but it can lower your taxes if you have large deductible expenses.
- Home Mortgage Interest Deduction: A tax deduction that allows homeowners to deduct interest paid on a home loan for a primary or secondary residence. To qualify, the loan must be secured by the home (a mortgage, home equity loan, or HELOC) and used to buy, build, or substantially improve the home. Currently, you can deduct interest on combined loan balances up to $750,000 (for mortgages taken out after Dec 15, 2017) – this is the limit set by the Tax Cuts and Jobs Act through 2025.
- (Older mortgages were grandfathered up to $1 million.) The interest on debt above that cap is not deductible. Importantly, this deduction is only available if you itemize. It’s one of the primary components of itemized deductions for those who still claim it. Many homeowners receive a Form 1098 (Mortgage Interest Statement) from their lender each January, reporting the total interest paid in the previous year – that form is used to document the deduction on Schedule A.
- Tax Cuts and Jobs Act (TCJA) of 2017: A major federal tax reform law that took effect in 2018. TCJA doubled the standard deduction (while eliminating personal exemptions) and placed new limits on itemized deductions (such as capping state and local tax deductions at $10k and lowering the mortgage interest cap to $750k). The result was a sharp decline in the number of taxpayers who itemize – from about 30% to under 10%.
- TCJA’s individual provisions (including the higher standard deduction and itemized limits) are set to sunset after 2025, which means in 2026 the rules could revert (standard deduction dropping and more people itemizing again) unless new legislation is passed. For now, through tax year 2025, the standard deduction remains high and the mortgage interest deduction remains an itemized-only benefit.
- Schedule A (Form 1040): The tax form used to list itemized deductions. If you have deductible mortgage interest, this is where it goes (line 8a for most mortgage interest, with additional lines for points and private mortgage insurance if those are deductible that year). Schedule A tallies up all your itemized expenses. You then compare that total to your standard deduction – generally, you’ll use Schedule A’s total only if it’s larger. If you’re taking the standard deduction, you skip Schedule A entirely. Knowing that mortgage interest appears on Schedule A underscores why you can’t take it when you’re not filing that form.
- State Income Tax Conformity: This refers to how state tax systems either conform to or deviate from federal tax rules. When it comes to deductions, some states conform by requiring the same method (standard or itemized) as on your federal return. Other states decouple this choice, allowing you to pick whichever yields the best result for state purposes.
- States also set their own standard deduction amounts and itemized deduction definitions. For instance, as noted, California permits independent itemizing and has its own (much lower) standard deduction, whereas Virginia requires the state deduction method to match the federal choice. Always look into your specific state’s stance – it can mean hundreds or thousands of dollars difference on your state tax bill.
- Above-the-Line vs. Below-the-Line Deductions: Mortgage interest is a below-the-line deduction (meaning it comes “below” the line where adjusted gross income is calculated, and is part of itemized deductions). Above-the-line deductions (also known as adjustments to income) are expenses you can deduct even if you don’t itemize. These include things like contributions to a traditional IRA, Health Savings Account (HSA) contributions, student loan interest, educator expenses, etc.
- They are claimed on the first page of the 1040 (Schedule 1). It’s worth noting because sometimes people ask, “Can I deduct any of my mortgage costs without itemizing?” Generally, no – mortgage interest is not an above-the-line deduction. (One rare exception: if you rent out part of your home or have a home office for self-employment, a portion of interest might be deductible against that business income, but that’s a different context.) So, unlike an HSA or IRA deduction, which you can take regardless of itemizing, the home mortgage interest deduction strictly requires itemizing.
- Married Filing Separately (MFS) Rule for Deductions: As mentioned earlier, when a married couple files separate tax returns, tax law requires coordination on deductions. If one spouse itemizes, the other spouse must itemize as well – they cannot take the standard deduction. In fact, on a separately filed return, if one spouse itemizes, the other spouse’s standard deduction is forced to $0 by law.
- This prevents a tax strategy where a couple could split deductions to have one take a full standard deduction and the other claim all itemized expenses. In the context of mortgage interest: if you’re married filing separately and your spouse claims the mortgage interest deduction on Schedule A, you also have to itemize your deductions (even if you personally have few deductions). This is an important rule to remember to avoid an IRS mismatch.
By understanding these key terms and entities, you can better grasp the mechanics behind why you can or cannot deduct certain things in various scenarios. Tax laws may seem convoluted, but they’re built on defined concepts like these. Now, armed with this knowledge, you can make informed decisions about whether to take the standard deduction or itemize for your mortgage interest – and avoid any pitfalls along the way.
FAQs: Quick Answers to Common Questions
Q: If I take the standard deduction, do I lose my mortgage interest deduction for that year?
A: Yes. In any year you claim the standard deduction on your federal return, you won’t separately deduct mortgage interest (since you’re not itemizing that year).
Q: Is there any way to deduct mortgage interest without itemizing?
A: Not on your federal return. Mortgage interest is a personal itemized deduction. The only exception would be if part of the interest qualifies as a business expense (for example, on a rental property or home office), which is a different situation.
Q: How do I decide if I should itemize or take the standard deduction?
A: Add up all your potential itemized deductions (mortgage interest, property taxes up to $10k, charitable gifts, etc.) and compare the sum to your standard deduction amount. If the sum is larger, itemizing will lower your taxes more; if not, the standard deduction is the better choice.
Q: What if my itemized deductions are just slightly below the standard deduction?
A: You’ll typically still take the standard deduction, since it gives a slightly bigger write-off. However, consider if you can “bunch” deductions – for instance, pay January’s mortgage payment a bit early (to get extra interest in December) or push a charitable donation into one year – to lift one year’s itemized total above the standard, then take standard the next year. Tax planning strategies like bunching can maximize deductions over a multi-year period.
Q: Can I deduct my property taxes and state taxes if I take the standard deduction?
A: No, not on the federal return. Those, like mortgage interest, are itemized deductions. If you take the standard deduction, you’re not separately deducting property taxes or state income taxes either. (Remember, there’s a $10,000 combined cap on state and local tax deductions when itemizing.) As with mortgage interest, you may be able to deduct property/state taxes on a state return if your state allows separate itemizing.
Q: My friend said their mortgage is paid off but they still get a deduction – how?
A: It’s likely they’re referring to the standard deduction. Once a mortgage is paid off (no interest), most people will simply take the standard deduction which still gives a tax reduction, just not specifically tied to a mortgage. Alternatively, they could have other deductions (like large charity or medical expenses) that let them itemize without mortgage interest. But generally, a paid-off home means itemizing is less common, and the standard deduction becomes the go-to.
Q: Did the 2017 tax law eliminate the mortgage interest deduction?
A: Not exactly. The Tax Cuts and Jobs Act of 2017 limited the mortgage interest deduction (new loans are capped at interest on $750k of debt, and home equity loan interest became deductible only if used for home improvements). More significantly, the law increased the standard deduction so much that millions fewer people now benefit from itemizing their mortgage interest. The deduction is still there for those who itemize, but far fewer taxpayers use it after 2018. The law change effectively reduces the number of folks who can take advantage of the mortgage interest write-off.
Q: Will the rules change after 2025?
A: Possibly. Many provisions of the Tax Cuts and Jobs Act – including the higher standard deduction and the $750k mortgage interest cap – are scheduled to expire after tax year 2025. If Congress doesn’t act, in 2026 the standard deduction will shrink to pre-2018 levels (roughly half its current value) and the mortgage interest deduction limit would revert to $1 million of debt, among other changes. This would mean more people might itemize again in 2026. However, Congress could extend the current rules or pass new tax legislation. It’s something to watch as 2025 approaches. For now, plan under the current rules.
Q: Can I take the standard deduction on federal and itemize on my state return?
A: It depends on your state. Many states (like California, New York, Illinois, etc.) allow you to choose independently – so yes, you can take the federal standard deduction and still itemize for state taxes. But some states (like Virginia, Georgia, and others) require that if you took the federal standard, you also take the state standard. Check your state’s tax instructions or talk to a tax pro to be sure of your state’s policy.
Q: If I’m married filing separately, can one of us take the standard deduction and the other itemize?
A: No. By law, if one spouse itemizes, the other spouse must itemize on their separate return as well (and neither can take the standard deduction in that case). Married filing separately requires a unified approach to avoid double counting deductions. So typically both spouses take the standard deduction, or both itemize – whichever yields a better combined result.