Tax breaks for homeowners in 2026: What changed, what expired, and what matters most

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Tax breaks for homeowners in 2026: What changed, what expired, and what matters most

The dust has settled on the One Big Beautiful Bill Act, and the tax landscape for homeowners looks quite a bit different than it did a year ago.

Some provisions expired while others expanded, and a few long-debated rules are now permanent. What’s less clear is who actually benefits from these changes — and who doesn’t.

To make sense of it all, NewHomeSource, a new home listings site with customer reviews, spoke with Keith Schroeder, a Wisconsin-based tax expert who runs The Wealthy Accountant blog, to break down the most important changes for homeowners in 2026.

Note: These changes affect returns filed in 2026 for the 2025 tax year, unless otherwise noted.

SALT deduction increases

“The biggest change benefiting homeowners for 2025 is the state and local tax deduction,” Schroeder said. “Since 2018, SALT was limited to $10,000. That increases to $40,000 in 2025.”

For homeowners in high-tax states, this is the most important headline.

In 2026, the cap rises to $40,400 and will climb 1% annually through 2029 before reverting to $10,000 in 2030.

However, how much you can actually deduct depends on your situation.

“This is not a straight $40,000 for every homeowner,” Schroeder said. “This is a deduction up to $40,000 for combined SALT, including things like income taxes, real estate property taxes, and personal property taxes.”

It’s also important to note that not all homeowners will benefit from the higher SALT cap. Many households take the standard deduction rather than itemizing, meaning the expanded SALT limit may not affect their tax bill at all. Renters and lower-income homeowners are also less likely to see direct benefits from this change.

For homeowners who don’t itemize — or whose deductions don’t exceed the standard deduction — the higher SALT cap may be largely irrelevant.

PMI is deductible again

Private mortgage insurance premiums (PMI) are tax-deductible again starting in 2026. This deduction had expired after 2021 and has now been revived under the new tax law; PMI will now be treated as deductible mortgage interest.

To qualify, adjusted gross income must be below $100,000 for single and joint returns, with the deduction phasing out completely at $110,000. When the deduction was last available, qualified homeowners received an average deduction of about $2,364.

This primarily affects conventional-loan buyers who put down less than 20% and are required to carry PMI. FHA mortgage insurance premiums are treated differently and do not qualify under the same rules.

If you are a first-time buyer stretching a bit and carrying a PMI, this could help. It won’t change the world, but it can take a bit of the sting out of your monthly payment.

The $750,000 mortgage interest limit is permanent

The mortgage interest deduction limit, which dropped from $1 million to $750,000 under the Tax Cuts and Jobs Act, is now permanent. While this isn’t new for most homeowners, the permanence of the rule removes lingering uncertainty.

“Taxpayers have lived with this restriction since 2018, so it is business as usual,” Schroeder said. “Income property owners may wish to shift mortgage debt from their primary residence and second home to the income property.”

Home equity loan interest remains nondeductible unless the funds are used to improve your home and fall under the $750,000 limit.

As with SALT, this deduction only applies to homeowners who itemize rather than take the standard deduction. For many first-time buyers, especially those early in their mortgage, the standard deduction may still be the better option.

Energy credits are gone

Not all homeowner-friendly provisions survived the latest round of tax changes. The Residential Clean Energy Credit and Energy Efficient Home Improvement Credit expired at the end of 2025. If you made qualifying improvements last year, you can still claim them on your 2025 return.

But for 2026 and beyond, no residential energy credits are available. Schroeder says that shouldn’t stop homeowners from making efficiency upgrades.

“The tax credit tail should not wag the dog,” he said. “The real issue is ROI. Does the investment make sense? If yes, then it is still worth pursuing.”

Energy costs keep creeping up, and efficiency upgrades can still pay for themselves over time.

“The value of energy properties is still a powerful wealth-building tool,” Schroeder said.

What first-time buyers should consider

Schroeder’s advice for buyers entering the market in 2026 is to focus on the fundamentals.

“Real estate is local,” he said. “Austin, Texas, is a different animal from Green Bay, Wisconsin.”

While tax breaks help, they shouldn’t be the main driver in where you choose to live.

“Taxes are the frosting on the cake. If taxes are the only reason to do the deal, there might be issues. And if lack of tax incentives make the deal not work, look for another opportunity. That is just how real estate works.”

The bottom line

The biggest takeaway from the 2026 tax changes is that headline-grabbing deductions don’t automatically translate into savings for every homeowner.

Every homeowner’s situation is different, and it’s worth spending the time to make sure you have done your homework when it comes to your taxes.

“When taxpayers neglect their due diligence, they can get in trouble quickly,” he said. “It is a mistake to think your neighbor’s or coworker’s situation is exactly like yours. It probably isn’t.”

This story was produced by NewHomeSource and reviewed and distributed by Stacker.