Mortgage Tax Calculator
Mortgage Tax
Use the mortgage tax savings calculator to determine how much your mortgage payments could reduce your income taxes. The interest paid on a mortgage, along with any points paid at closing, are tax-deductible if you itemize on your tax return. Use this calculator to see how this deduction can create a significant tax savings.
Information and interactive calculators are made available to you only as self-help tools for your independent use and are not intended to provide investment or tax advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
Mortgage Tax Savings Calculator
Loan information: |
Closing Costs: $7,800.00 | APR after taxes 5.402% |
Total Payments $881,011.01 |
Mortgage Term 30 years |
Definitions
Mortgage amount
Original or expected balance for your mortgage. Taxpayers can deduct the interest paid on qualified residences for up to $750,000 in total mortgage debt (the limit is $375,000 if married and filing separately). Any interest paid on first, second or home equity mortgages over this amount is not tax-deductible. If you already have outstanding mortgages on other qualified residences, this may limit your deduction. Our calculator limits your interest deduction to the interest payment that would be paid on a $750,000 mortgage.
Interest rate
Annual interest rate for this mortgage.
Interest rate after taxes
Annual effective interest rate, after taxes are taken into account. Please note that in addition to the $750,000 mortgage debt limit; this calculator assumes that your itemized deductions will exceed the standard deduction for your income tax filing status. If your itemized deductions don't exceed your standard deduction, the benefit of deducting the interest on your home will be reduced or eliminated.
| Filing Status | Standard Deduction |
|---|---|
| Married Filing Joint | $27,700 |
| Qualified Widow(er) | $27,700 |
| Single | $13,850 |
| Heads of Household | $20,800 |
| Married Filing Separately | $13,850 |
Term in years
The number of years over which you will repay this loan. The most common mortgage terms are 15 years and 30 years.
Monthly payment
Monthly principal and interest payment (PI).
Federal tax rate:
The marginal Federal tax rate you expect to pay. Use the ‘Filing Status and Federal Income Tax Rates on Taxable Income’ table to assist you in estimating your federal tax rate.
| Tax Rate | Married Filing Jointly or Qualified Widow(er) | Single | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| 10% | $0 - $22,000 | $0 - $11,000 | $0 - $15,700 | $0 - $11,000 |
| 12% | $22,000 - $89,450 | $11,000 - $44,725 | $15,700 - $59,850 | $11,000 - $44,725 |
| 22% | $89,450 - $190,750 | $44,725 - $95,375 | $59,850 - $95,350 | $44,725 - $95,375 |
| 24% | $190,750 - $364,200 | $95,375 - $182,100 | $95,350 - $182,100 | $95,375 - $182,100 |
| 32% | $364,200 - $462,500 | $182,100 - $231,250 | $182,100 - $231,250 | $182,100 - $231,250 |
| 35% | $462,500 - $693,750 | $231,250 - $578,125 | $231,250 - $578,125 | $231,250 - $346,875 |
| 37% | Over $693,750 | Over $578,125 | Over $578,125 | Over $346,875 |
| *Caution: Do not use these tax rate schedules to figure 2022 taxes. Use only to figure 2023 estimates. Source: Rev. Proc. 2022-45 | ||||
State tax rate:
The marginal state tax rate you expect to pay.
Loan origination percent
The percent of your loan charged as a loan origination fee. For example, a 1% fee on a $120,000 loan would cost $1,200.
Discount points
Total number of "points" purchased to reduce your mortgage's interest rate. Each "point" costs 1% of your loan amount. As long as the points paid are not a broker's commission, they are considered tax-deductible in the year that they were paid.
Other fees
Any other fees that should be included in the APR calculation. These fees can vary by lender, but at a minimum usually includes prepaid interest.
Annual Percentage Rate (APR)
A standard calculation used by lenders. It is designed to help borrowers compare different loan options. For example, a loan with a lower stated interest rate may be a bad value if its fees are too high. Likewise, a loan with a higher stated rate with very low fees could be an exceptional value. APR calculations incorporate these fees into a single rate. You can then compare loans with different fees, rates or different terms.
APR after taxes
Annual percentage rate after taxes are taken into account. Unlike your after-tax interest rate, the APR after taxes takes closing costs into account.
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