Trump's big beautiful' bill locks in key tax breaks for homeowners—here's what to know

President Donald Trump's tax and spending bill revives and expands homeowner tax breaks — while making the current mortgage interest deduction cap permanent.

The $750,000 limit on deductible mortgage debt ($375,000 for single filers) had been set to expire after 2025 and revert to the previous $1 million cap. Under the new law, that change is off the table.

While the deduction itself isn't expanding, the bill restores and boosts other federal tax breaks that benefit homeowners. A deduction for mortgage insurance premiums has been revived, and a cap on state and local tax deductions has been temporarily raised — changes that could save thousands for some homeowners, especially in high-tax states.

What stays the same — and what's back for good

The $750,000 mortgage deduction cap applies to acquisition debt used to buy, build or substantially improve a primary or secondary residence. There are no income limits, but homeowners must itemize their tax return to claim the deduction.

The cap isn't indexed for inflation, however, meaning its value will erode over time as home prices and mortgage balances rise.

The deduction for mortgage insurance premiums, which expired after the 2021 tax year, is also permanently reinstated. This includes:

• Private mortgage insurance
• Mortgage insurance premiums on FHA loans, including both upfront and annual charges
• VA funding fees
• USDA guarantee fees, which include upfront and annual costs

Income limits apply: Borrowers can deduct mortgage insurance premiums if their adjusted gross income is below $100,000 (or $50,000 for married individuals filing separately), with the deduction gradually phasing out above those thresholds.

Roughly 4 million taxpayers claimed the mortgage insurance deduction each year when it was previously in effect, for an average deduction of $1,454, according to U.S. Mortgage Insurers.

For borrowers using FHA, VA or conventional loans with less than 20% down, the restored deduction will offer some relief on monthly housing costs.

A higher SALT cap sweetens the deal — at least for now

The bill also temporarily raises the SALT deduction cap from $10,000 to $40,000 per household for tax years 2025 through 2029, with a phaseout beginning at $500,000 of income in 2025. The deduction cap reverts to $10,000 in 2030.

The change could be especially impactful for homeowners in high-tax states like New York, New Jersey and California, where deductible state and local taxes often exceed the previous $10,000 cap.

As a result, the higher SALT limit tends to benefit higher-income homeowners the most. A single Californian earning $330,000, for example, could save nearly $5,000 on federal taxes under the expanded cap, according to a Wall Street Journal estimate.

“For homeowners in states or cities with high tax rates on income or personal property the increase in SALT cap could be the difference between taking the standard deduction and itemizing,” says Scott Keegan, a certified financial planner in Missouri.

Keegan recommends homeowners keep tabs on other itemized deductions — such as medical expenses and mortgage interest — as the higher SALT cap could push their total deductions above the standard amount, making itemizing worthwhile even if it hasn't been in previous years.