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Restructuring the Mortgage Interest Deduction

View other TPC estimates on the distribution of tax expenditures.

The deduction for mortgage interest on owner-occupied homes is one of the largest individual income tax expenditures provided to households. The Office of Management and Budget estimates the mortgage interest deduction to be worth nearly $90 billion in fiscal year 2011.

The following tables present a distributional analysis of various options to restructure the mortgage interest deduction. The options range from a complete repeal of the mortgage interest deduction to replacing the mortgage interest deduction with a revenue-neutral credit. Estimates are shown in calendar year 2015 against both current law and current policy and in calendar year 2011 against current law.

A detailed research report on options to reform the mortgage interest deduction can be found here.

Options to Restructure Mortgage Interest Deduction in 2015
Repeal Mortgage Interest Deduction
2015 versus Current Law
2015 versus Current Policy
Limit Eligible Mortgages to $500,000 on Primary Residence
2015 versus Current Law
2015 versus Current Policy
Replace Deduction with 12% Refundable Credit,
Limit Eligible Mortgages to $500,000
2015 versus Current Law
2015 versus Current Policy
Replace Deduction with 12% Nonrefundable Credit,
Limit Eligible Mortgages to $500,000
2015 versus Current Law
2015 versus Current Policy
Replace Deduction with 15% Nonrefundable Credit,
Limit Eligible Mortgages to $500,000
2015 versus Current Law
2015 versus Current Policy
Replace Deduction with 20% Nonrefundable Credit,
Limit Eligible Mortgages to $500,000 on Primary Residence
2015 versus Current Law
2015 versus Current Policy
Replace Deduction with 27.9% Nonrefundable Credit,
Limit Eligible Mortgages to $500,000 on Primary Residence
2015 versus Current Law
2015 versus Current Policy

Options to Restructure Mortgage Interest Deduction in 2011
Repeal Mortgage Interest Deduction
2011 versus Current Law
 
 
 

Limit Eligible Mortgages to $500,000 on Primary Residence

2011 versus Current Law
 
 
 
Replace Deduction with Revenue-neutral Nonrefundable Credit
2011 versus Current Law
 
 
Replace Deduction with Revenue-neutral Refundable Credit
2011 versus Current Law