Tax Provisions in New U.S. Bill Offer Potential Savings for Homeowners

The One Big Beautiful Bill Act (OBBBA) introduces several tax provisions that could impact U.S. homeowners, particularly through changes in deductions for state and local taxes and mortgage insurance costs. One significant adjustment is the increase in the state and local tax (SALT) deduction cap from $10,000 to $40,000 for taxpayers earning up to $500,000 annually, which provides substantial relief in high-tax states such as New Jersey and New York. This extension, set to last until 2030, can reduce federal tax liabilities for many homeowners by allowing larger deductions on state and local taxes, including property taxes.

Additionally, the OBBBA reinstates the ability to deduct mortgage insurance premiums on federal tax returns, a provision previously phased out. This deduction is especially relevant for homeowners who purchased properties with less than 20% down payment on conventional mortgages. However, taxpayers must choose between itemizing deductions, which include mortgage insurance premiums, or taking the standard deduction; the recent increases in standard deduction amounts may influence this decision.

The bill also emphasizes investment in Opportunity Zones—economically distressed areas across the U.S.—by encouraging development in real estate that could enhance affordable housing options. Increasing investment in these zones through tax incentives may address low housing inventory, expanding opportunities for homeownership in underserved communities.

Overall, while not all homeowners will benefit equally, those in high-tax states and those paying mortgage insurance could experience noticeable tax savings. Understanding these provisions and their interplay with existing tax deductions is critical for homeowners and insurance professionals assisting clients with tax planning and property-related financial decisions. The OBBBA’s housing-related tax measures underscore ongoing policy efforts to support housing affordability through targeted fiscal incentives.