Is PMI tax deductible? Yes, beginning in the 2026 tax year. When the One Big Beautiful Bill passed in 2025, it brought back the private mortgage insurance (PMI) tax deduction. This update applies to 2026 taxes, or the return you’ll file in 2027.
If you pay PMI, you may be able to write it off, as long as you itemize and fall under the income limit.
It’s the first time this deduction has been back since the 2021 tax year, and it’s a real break for homeowners who’ve been paying PMI. Private mortgage insurance, or PMI, is the extra monthly cost a lender charges when your down payment is less than 20%. Here’s what changed, who qualifies, and what you could expect to save.
A quick overview of the PMI tax deduction
Congress first made PMI deductible in 2007. The deduction lapsed several times over the years and expired for good after 2021. That left homeowners unable to claim it on their itemized tax returns from 2022 through 2025.
But section 70108 of the One Big Beautiful Bill (BBB) Act ended that gap. As of January 1, 2026, mortgage insurance premiums are now treated as qualified residence interest, the same category as your mortgage interest payments. (See what other changes the BBB brought for homeowners here.)
Unlike the earlier version of this deduction, which Congress had to renew year after year, this one is permanent.
Your tax return this year vs. next year:
- 2025 tax return (filed in 2026): PMI wasn’t deductible. If you itemized your taxes when you filed this year, private mortgage insurance was not eligible to claim.
- 2026 tax return (filed in 2027): PMI becomes deductible for the first time since 2021. If you itemize when you file in 2027, you may be eligible to write off PMI.
What could you do with your tax savings? Grow your funds for future plans with Cornerstone’s high-yield savings account.
Do you qualify for the PMI tax deduction?
The current deduction covers PMI on conventional loans, FHA mortgage insurance premiums, and certain mortgage insurance costs associated with USDA and VA loans when they’re tied to acquisition debt used to buy, build, or improve a home.
To claim the deduction, a few conditions apply:
- You have to itemize. PMI is claimed on Schedule A along with mortgage interest. It only helps if your total itemized deductions are more than the standard deduction. For 2026, that’s $16,100 for single filers and $32,200 for married couples filing jointly.
- Income limits still apply. The deduction phases out for homeowners with adjusted gross income above $100,000 and disappears entirely above $109,000. That $100,000 starting point is the same whether you file single or jointly, so couples don’t get a higher threshold. For married filing separately, it starts phasing out at $50,000 and disappears above $54,500.
- Loan limits still apply. PMI is treated as mortgage interest, so it falls under the same $750,000 mortgage interest cap ($375,000 married filing separately).
When this deduction was last available, the average homeowner claimed roughly $1,400 a year. This figure is the size of the tax deduction, not the amount of savings. Your actual savings may fluctuate based on your tax bracket.
If you claim roughly $1,400 in PMI, for example, you may see a few hundred dollars back on your tax return. The exact number depends on your loan size, your PMI rate, and your tax bracket.
How to claim the PMI deduction
When it’s time to file your 2026 return, claiming PMI works the same way as claiming mortgage interest. Your lender or loan servicer will send you Form 1098 if you’re required to receive it. Box 5 shows the mortgage insurance premiums you paid for the year.
From there:
- Confirm you’re itemizing. If your itemized deductions, including mortgage interest, PMI, property taxes, and charitable giving, don’t add up to more than your standard deduction, there’s nothing to gain from itemizing.
- Report the amount from Box 5 on Schedule A. PMI gets entered alongside your mortgage interest, not as a separate line item elsewhere.
- Check your AGI against the phase-out. If your adjusted gross income (AGI) is close to $100,000, your tax preparer can tell you exactly how much of the deduction you can claim.
Most homeowners won’t need to do anything differently than they already do at tax time. The form arrives the same way, the deduction just gets claimed on a line that’s been unused since 2021.
While the tax deduction treats all mortgage insurance premiums the same, removing insurance from your loan works in a few different ways.
You can request to cancel PMI on a conventional loan once you reach 80% loan-to-value; your lender removes it automatically at 78%. FHA mortgage insurance premiums (MIP) and USDA annual fees often remain for the life of the loan and may only be removed by refinancing into another loan type. The VA funding fee is a one-time cost paid upfront, not monthly.
Is it time to drop your PMI?
A tax break is nice. Not paying PMI is even better. If you’ve built up enough equity, you may be able to remove PMI sooner than expected. Contact your loan officer to find out where you stand.
Sources deemed reliable but not guaranteed. For educational purposes only. Cornerstone Capital Bank does not provide tax advisory services. Please contact a qualified professional for specific guidance.
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