Mortgage Insurance Premiums: Are They Tax‑Deductible for Your Next Return?

Answer

Many homebuyers wonder if mortgage insurance premiums—including PMI, FHA mortgage insurance, VA funding fees or USDA guarantee fees—still qualify as a tax deduction on their federal return. This question gained traction because Congress allowed these deductions only sporadically, and the rule expired at the end of 2021.

Under current federal law, mortgage insurance premiums paid in 2022, 2023 and beyond are not deductible for most taxpayers. The deduction lived under §163(h) of the Internal Revenue Code from 2007 through 2021, then lapsed because Congress did not renew the Tax Extender provision before December 31, 2021.

From 2007–2021, homeowners with an adjusted gross income (AGI) up to $100,000 (or $50,000 if married filing separately) could claim a full deduction for qualified premiums reported on Form 1098, Box 5. The benefit phased out ratably and disappeared entirely at an AGI of $109,000 (or $54,500 for separate filers). Eligible insurance types included:

• Private Mortgage Insurance (PMI) on conventional loans
• Up‑front and annual FHA mortgage insurance premiums
• VA funding fees
• USDA Rural Development guarantee fees

Since the expiration, tax software and online articles referencing PMI deductions may show outdated guidance. Always check the IRS’s latest updates in Publication 936, “Home Mortgage Interest Deduction,” available at irs.gov.

At the state level, rules vary. Some states conform to the federal code and disallow the deduction, while others decouple and may permit a state‑level write‑off. If your state permits it, you might still deduct mortgage insurance premiums on your state return even though the federal deduction is unavailable.

Keep in mind that mortgage interest remains deductible (subject to loan limits of $750,000 for loans originated after December 15, 2017). Mortgage insurance deductions, however, remain separate and require specific congressional action to revive.

Bottom line: Unless Congress reinstates the tax extender for mortgage insurance premiums, you cannot deduct PMI or other mortgage insurance premiums on your federal return for tax years 2022 and after. Before filing, it’s advisable to consult a licensed CPA or tax adviser about both federal and state treatment of mortgage insurance in your jurisdiction.