The Big Tax Bill: Wins and Losses for Homeowners

Browse Homes in Philly:

Mortgage Insurance Deduction Is Back

Private mortgage insurance (PMI) is something many homebuyers pay when they put down less than 20% on a home. It’s meant to protect the lender, but it adds an extra monthly cost for you.

For years, homeowners could deduct PMI payments on their taxes, just like mortgage interest. This helped lower their tax bill and made buying a home a bit more affordable.

However, this deduction was always temporary and kept expiring and coming back. The last time it was available was in 2021, and then it disappeared again—leaving many buyers with higher costs and no tax relief.

Now (After the Bill):
The new bill brings back the PMI deduction and that’s big news, especially for first-time buyers or anyone who couldn’t afford a large down payment. According to industry data, homeowners who qualified for the deduction in 2021 saved an average of $2,364. That kind of savings can make a big difference in the first few years of owning a home.

More Affordable Housing on the Way

The Low-Income Housing Tax Credit already existed, but funding was limited.

Now: The bill increases the amount of credits states can give out, encouraging more developers to build or fix up affordable rental homes.

💡 Experts say this could lead to over 1 million new or preserved affordable homes between 2026 and 2035. That’s big news for renters hoping to buy in the future.

Expanded Support for Rural Areas

Before:
Most tax incentives and development programs focused on urban areas or general low-income neighborhoods. Rural communities were often left out, even though they face big challenges like aging housing, limited rental options, and fewer investment opportunities.

Now (After the Bill):
The new bill includes several changes that specifically support rural communities—and that’s great news for places like rural Pennsylvania, where many small towns and farming areas have been struggling with housing shortages and limited access to affordable financing.

✅ Opportunity Zones Expanded

More rural areas now qualify as Opportunity Zones, which means investors get tax breaks for building homes and businesses in those areas. This could lead to new housing and job opportunities in small towns across PA.

✅ Tax Breaks for Rural Loans

The bill also gives tax benefits to banks that offer loans on farmland, fishing properties, and rural land. That could mean better financing options for families, farmers, and first-time buyers in places like Lancaster, Perry, or Schuylkill County.

These changes aim to bring new life to rural areas by making it easier to build, borrow, and invest.

Bigger SALT Deduction (State and Local Taxes)

The SALT (State and Local Tax) deduction cap is increasing from $10,000 to $40,000 through 2030.

In Philadelphia, this mostly benefits higher-income homeowners who pay significant property taxes and the city wage tax. These residents may now deduct more of those taxes on their federal returns, leading to potentially thousands in extra tax savings.

This change could also give a small boost to Philly’s higher-end housing market, especially in neighborhoods where high property taxes had made buyers hesitant.

For most middle-income households, though, the standard deduction will still offer more savings than itemizing.

Mortgage Interest Deduction Still Capped

Before: Homeowners could deduct mortgage interest on loans up to $1 million, helping reduce their taxable income—especially for those in more expensive housing markets. The average tax savings from this deduction was about $1,900 to $4,000 per year, depending on income and loan size.

Now: The cap remains lowered at $750,000. This mainly affects buyers of higher-priced homes, especially in cities like Philadelphia where townhomes and new construction can easily exceed that limit.

Fewer People Can Itemize Deductions

Before: Many homeowners could itemize deductions like mortgage interest, PMI, charitable contributions, and medical expenses—allowing them to reduce their taxable income more than with the standard deduction.

Now: With the standard deduction now much higher (up to $31,500 for married couples filing jointly), fewer people will benefit from itemizing. Unless your expenses are high, you’re likely better off taking the standard deduction—but that means losing out on those itemized savings.

No More Moving Expense Deductions

Before: If you moved for a new job—especially across cities or states—you could deduct certain moving expenses from your federal taxes. This included things like truck rentals, professional movers, gas or airfare, shipping your belongings, and even storage during the move. For many people, this deduction helped offset the high costs of starting a new job in a new place.

Now: That deduction has been eliminated for everyone except active-duty military members who are relocating under orders.

Energy Efficiency Tax Credits Are Ending

Before: You could get up to 30% back in tax credits for installing solar panels, heat pumps, insulation, energy-efficient windows, and more—saving potentially thousands of dollars.

Now: Both the Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit will end after December 31, 2025.

👉 So if you’re planning upgrades, complete and pay for them before the deadline to claim those savings.

Homes for Sale:

Final thoughts: The Big Bill brings a lot of helpful changes—especially if you're a first-time buyer, someone who put down less than 20%, or a homeowner in a high-tax state. It restores key deductions, supports the creation of affordable housing, and encourages investment in neighborhoods that need it most.

But there are also some downsides. Energy-efficiency tax breaks are ending soon, and it’s harder now to benefit from itemizing your tax deductions—unless your expenses are very high.

*** This article was prepared by real estate professionals—not tax advisors or attorneys. While we’ve done our best to simplify the latest updates for homeowners and buyers, we always recommend speaking with a licensed tax professional for advice specific to your situation.

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