America’s popular mortgage interest deduction is about to lose a lot of its punch.
The House Republican tax plan halves the cap on the deduction of mortgage debt for newly purchased homes to $500,000. It does, however, maintain the current deduction of up to $1 million in mortgage debt for current homeowners.
The plan also nearly doubles the standard deduction, meaning fewer taxpayers would itemize and take the mortgage interest deduction. Currently, about 21 percent of filers take the mortgage deduction, but under the new framework only about 4 percent would, according to recent estimates from the Tax Policy Center.