Mortgage Tax Savings Calculator

Interest paid on a mortgage is tax deductible if you itemize on your tax return. So are points that are paid to lower your interest rate. Use this calculator to determine how much you could save in income taxes. Click on the "View Report" button to view the results in detail.

Your first year tax savings is FIRST_YEAR_TAX_SAVINGS.

Total interest paid in the first year would be FIRST_YEAR_INTEREST. You also paid DISCOUNT_POINTS_AMT for DISCOUNT_POINTS_PERCENT discount point(s). With a combined state and federal tax rate of MARGINAL_TAX_RATE*, you could save FIRST_YEAR_TAX_SAVINGS in the first year. Your average tax savings over the TERM-year loan term is AVG_TAX_SAVINGS per year. Your effective interest rate after taxes is TAX_ADJ_RATE. **GRAPH**

Your APR is LOAN_APR for this loan. After taxes your APR is LOAN_APR_AFT.

Annual Percentage Rate (APR) is 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. While APR calculations may vary from lender to lender to a small degree, all lenders must follow the same basic rules.

Your effective income tax rate assumes that you are able deduct your state and local taxes from your Federal income taxes. This produces a lower effective tax rate than simply adding your Federal, state and local taxes together. The calculation we use is: State and local income tax rate X (1- Federal income tax rate) + Federal income tax rate. In your case this produces an effective tax rate of MARGINAL_TAX_RATE.

Mortgage Summary

**GRAPH**
Mortgage Information
Loan amountLOAN_AMOUNT
TermTERM years
Interest rateINTEREST_RATE
After tax rateTAX_ADJ_RATE
Monthly paymentMONTHLY_PI
First year interestFIRST_YEAR_INTEREST
First year tax savingsFIRST_YEAR_TAX_SAVINGS*

*Tax savings assumes that you qualify for a home interest deduction and that you itemize your taxes on schedule A of your Federal tax return. The maximum mortgage debt for which interest is deductible is limited to $1,000,000. Total tax savings may be less for higher incomes that have their allowable itemized deductions phased out. Your total tax savings may also be reduced if you prepay your loan.

Closing Costs
Origination feeORIGINATION_FEES_AMT
Paid for pointsDISCOUNT_POINTS_AMT
Other feesOTHER_FEES
Total closing costsTOTAL_CLOSING_COSTS
APRLOAN_APR*
APR after taxesLOAN_APR_AFT

Payment Schedule

**REPEATING GROUP**

Mortgage Tax Savings Calculator Definitions

Mortgage amount
Original or expected balance for your mortgage. Taxpayers can deduct the interest paid on first and second mortgages up to $1,000,000 in mortgage debt (the limit is $500,000 if married and filing separately). Any interest paid on first or second mortgages over this amount is not tax deductible. Our calculator limits your interest deduction to the interest payment that would be paid on a $1,000,000 mortgage. Home equity debt interest deductibility is limited to the smaller of $100,000 or the total market value of your home minus outstanding debt. For home equity loans, please keep your loan amount below this amount or you may overstate your tax savings.
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 $1,000,000 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. The standard deduction for married couples filing a joint return is $12,400 for 2014. The standard deduction for single individuals and married couples filing separate returns is $6,200 for 2014. The standard deduction for heads of household is $9,100 for 2014. You should also be aware that the total tax savings may be less for higher incomes that have their allowable itemized deductions phased out.
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 table below to assist you in estimating your Federal 2014 tax rate.
Filing Status and Income Tax Rates 2014*
Tax RateMarried Filing Jointly or Qualified Widow(er)SingleHead of HouseholdMarried Filing Separately
10%$0 - $18,150$0 - $9,075$0 - $12,950$0 - $9,075
15%$18,150 - $73,800$9,075 - $36,900$12,950 - $49,400$9,075 - $36,900
25%$73,800 - $148,850$36,900 - $89,350$49,400 - $127,550$36,900 - $74,425
28%$148,850 - $226,850$89,350 - $186,350$127,550 - $206,600$74,425 - $113,425
33%$226,850 - $405,100$186,350 - $405,100$206,600 - $405,100$113,425 - $202,550
35%$405,100 - $457,600$405,100 - $406,750$405,100 - $432,200$202,550 - $228,800
39.6%over $457,600over $406,750over $432,200over $228,800
*Caution: Do not use these tax rate schedules to figure 2013 taxes. Use only to figure 2014 estimates. Source: 2014 tax brackets http://www.irs.gov
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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