Jane Dotson
Private mortgage insurance (PMI) is often required for homebuyers who put down less than 20% on their homes. While the tax deductibility of PMI has been an on-again, off-again affair, it is currently not available for the 2022 tax year or later. The tax break was allowed to expire after 2021, and Congress has not extended this provision. However, there is a possibility that Congress will reinstate the break in the future. Homeowners who were eligible for the PMI tax deduction in previous years but did not take it may be able to amend their old returns to claim it retroactively.
| Characteristics | Values |
|---|---|
| Tax break for mortgage insurance years | 2018, 2019, 2020, 2021 |
| Tax break for mortgage insurance year when it expired | 2021 |
| Tax break for mortgage insurance year when it is no longer available | 2022 and beyond |
| Tax break for mortgage insurance year when it might be available again | If Congress passes an extension |
| Tax break for mortgage insurance eligibility criteria | Itemizing deductions, mortgage taken out on or after January 1, 2007, primary or second home, income below $109,000 |
| Tax break for mortgage insurance deduction location on Form 1040 | Line 8d of Schedule A |
| Tax break for mortgage insurance amount | Up to a few hundred dollars |
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What You'll Learn
The tax break for mortgage insurance expired after 2021
The Further Consolidated Appropriations Act of 2020 allowed MIP and PMI tax deductions for tax years 2018 through 2021 if qualified taxpayers filed amended federal tax returns. This deduction expired at the end of 2021 and was not extended by Congress.
The tax break for mortgage insurance has been an on-again, off-again affair for years. Homeowners who might have benefited from the deduction in the past should speak with a financial advisor to determine whether they can amend past returns and claim the deduction retroactively.
In February 2025, a new bill called the Mortgage Insurance Tax Deduction Act of 2025 was introduced to bring back the tax deduction. However, as of April 2025, this bill has not been passed into law.
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Taxpayers can amend old returns to claim the tax break
Private mortgage insurance (PMI) and mortgage insurance premiums (MIP) are often required for homebuyers who put down less than 20% on their homes. The Further Consolidated Appropriations Act of 2020 allowed MIP and PMI tax deductions for tax years 2018 through 2021 if qualified taxpayers filed amended federal tax returns. Taxpayers can amend old returns to claim the tax break.
To amend a return, file Form 1040-X, Amended U.S. Individual Income Tax Return. You can use tax software to electronically file your 1040-X online. Submit all the same forms and schedules as you did when you filed your original Form 1040, even if you don't have adjustments on them. You can also attach Form 8888, Allocation of Refund (Including Savings Bond Purchases) PDF to deposit your refund to multiple bank accounts. You can't use refunds from amended returns to buy savings bonds. Mail a check or money order payable to the United States Treasury with Form 1040-V, Payment Voucher PDF.
Generally, to claim a refund, you must file an amended return within 3 years after the date you filed your original return or 2 years after the date you paid the tax, whichever is later. If you filed early, count from the April tax deadline. If you amend a return for tax years 2021 and later, you can request your refund by direct deposit. Enter your bank account information on the electronically filed Form 1040-X or corrected Form 1040-SS/PR. If you submitted a paper version of Form 1040-X, you'll receive a paper check.
If you change your federal return, it may affect your state tax liability. For information on how to correct your state tax return, contact your state tax agency. Do not attach your state tax return to your amended return.
You can use Form 1040-X to report important changes, such as correcting your filing status, adding or removing a dependent, claiming tax deductions or credits you missed, or adding taxable income you forgot about. You usually don't need to file an amended return if you discover math or clerical errors on a recently filed tax return. The IRS will often correct those types of mistakes on its own and, if necessary, send you a bill for the additional tax due or a refund if the error was in your favor.
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The tax break applied to private mortgage insurance (PMI)
Private mortgage insurance (PMI) is typically required for homebuyers who put down less than 20% of the total home price. PMI protects the lender if the borrower defaults on the loan. The Tax Relief and Health Care Act of 2006 introduced the deduction for mortgage insurance premiums, and the deduction was extended several times until it expired at the end of 2021.
The Further Consolidated Appropriations Act of 2020 allowed for PMI tax deductions for tax years 2018 through 2021 if qualified taxpayers filed amended federal tax returns. However, this deduction expired at the end of 2021 and is not available for the 2022 tax year or beyond.
There were also restrictions to PMI deductions, such as only applying to refinanced funds up to the original loan amount and not any additional funds borrowed. Additionally, the deduction was not allowed for taxpayers with an adjusted gross income (AGI) over $109,000 or $54,500 for married couples filing separately.
While the PMI deduction is no longer available, homeowners may still be able to leverage other tax deductions, such as the mortgage interest they pay yearly and state and local real estate taxes.
In February 2025, a new bill called the Mortgage Insurance Tax Deduction Act of 2025 was introduced to reinstate the PMI tax deduction. As of 2024, it is unclear if this bill has been passed into law.
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Homeowners must itemize deductions to qualify for the tax break
The tax break for mortgage insurance has been an on-again, off-again affair for years, but it is currently unavailable for the 2022 tax year and beyond. The last time private mortgage insurance (PMI) or mortgage insurance premiums (MIP) were deductible was for the 2021 tax year. However, this may change in the future if Congress passes an extension.
To qualify for the tax break, homeowners must itemize deductions on Schedule A (Form 1040) rather than taking the standard deduction. This means that homeowners must list and total specific expenses on their tax returns instead of claiming the standard deduction amount. For the 2018-2021 tax years, eligible homeowners could deduct PMI or MIP from their federal taxes if they met the income requirements and filed amended tax returns.
The standard deduction has been raised significantly in recent years, so many homeowners who might have previously itemized mortgage-related deductions now opt for the standard deduction, which simplifies filing returns. However, homeowners with sufficient mortgage interest and other qualified expenses exceeding the standard deduction may benefit from itemizing these expenses.
It is important to note that the mortgage insurance deduction is separate from the home mortgage interest deduction. Homeowners can still deduct mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness, with higher limitations for indebtedness incurred before December 16, 2017.
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The tax break was extended by Congress multiple times
The tax break for mortgage insurance was first introduced in 2006 by the Tax Relief and Health Care Act. Since then, Congress has made several moves to extend or reinstate this deduction.
In 2015, the Protecting Americans from Tax Hikes (PATH) Act extended the deduction for one year, covering the 2015 tax year. The deduction was extended again in 2017 by the Bipartisan Budget Act of 2018, which retroactively covered the 2017 tax year.
In 2019, the Further Consolidated Appropriations Act allowed for the deduction of mortgage insurance premiums (MIP) and private mortgage insurance (PMI) for the 2018, 2019, 2020, and 2021 tax years. This was applied retroactively to 2018 and 2019 and expired at the end of 2021.
Despite these extensions, the tax break for mortgage insurance premiums expired in 2021. However, there are ongoing efforts in Congress to reinstate it. The Middle Class Mortgage Insurance Premium Act, for example, aims to restore and expand the MIP deduction. If passed, it would raise the income cap for eligibility and make the deduction permanent.
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Frequently asked questions
No, the tax deduction for mortgage insurance expired at the end of 2021 and has not been extended since.
The tax deduction for mortgage insurance was last available for the 2018-2021 tax years.
Deducting mortgage insurance can reduce your tax bill by a few hundred dollars per year.
To qualify for the tax deduction for mortgage insurance, you must itemize deductions rather than taking the standard deduction on your federal tax return.
Yes, there is a possibility that the tax deduction for mortgage insurance will be reinstated in the future. A new bill called the Mortgage Insurance Tax Deduction Act of 2025 was introduced in February 2025.
