Every January, a small envelope arrives in your mailbox or a notification pops up in your lender’s online portal. For a lot of homeowners, it gets tossed into a junk pile or deleted without a second thought. That document is IRS Form 1098, the Mortgage Interest Statement, and ignoring it could mean leaving real money on the table when April rolls around.
The stakes around this particular form have quietly grown bigger in 2026 thanks to a significant shift in tax law. If you’ve dismissed Form 1098 in past years, this might be the year to pay closer attention.
What Exactly Is Form 1098?
IRS Form 1098 reports your mortgage interest paid and is the key document for claiming the mortgage interest deduction on Schedule A. The primary purpose of Form 1098 is to report the amount of mortgage interest and related expenses paid by a borrower to a lender during the tax year, and borrowers use it to claim a deduction for mortgage interest on their federal income tax returns.
If you paid $600 or more of mortgage interest during the year on any one mortgage, you will generally receive a Form 1098 or a similar statement from the mortgage holder. The mortgage interest statement you receive should show not only the total interest paid during the year but also your deductible points paid during the year.
When Does It Arrive and What Should You Do With It?
For tax year 2025, the recipient (borrower) copy is due January 31, 2026, with the next-business-day rule shifting it to February 2, 2026, and the IRS electronic filing copy is due March 31, 2026. Most lenders also make the form available through their online portals, which means you may have it digitally before the paper copy reaches your door.
The best move is to gather your Form 1098, run the numbers both ways, and make the choice that saves you the most. Whether you download it or wait for the paper version, the key is not letting it disappear into a drawer or a recycling bin before you’ve had a chance to review it with your tax preparer.
Why So Many Homeowners Skip It
Most homeowners toss their Form 1098 into a pile of tax documents without really understanding what it means for their bottom line. That’s a costly mistake, as for many homeowners, mortgage interest is the single largest itemized deduction available, potentially saving thousands of dollars each tax season.
Changes enacted by the Tax Cuts and Jobs Act, specifically the near doubling of the standard deduction and the $10,000 limit placed on the deduction for state and local income taxes, are estimated to have reduced the itemization rate generally. The most recent data from the Internal Revenue Service show that the overall itemization rate fell from 30.6% in 2017 to 9.2% in 2021. Put simply, far fewer people found it worth the effort to itemize after 2017, so Form 1098 lost its urgency for a large chunk of homeowners.
The Big 2026 Change That Makes This Form Relevant Again
Here’s something that makes Form 1098 especially worth paying attention to this year: the state and local tax (SALT) deduction cap has dramatically increased for 2026. From 2018 through 2025, the SALT deduction was capped at $10,000. This cap prevented millions of homeowners in high-tax states like California, New York, and New Jersey from itemizing because their property taxes alone often exceeded the standard deduction threshold only when combined with mortgage interest.
The SALT deduction cap has increased to $40,000 for tax years 2025 through 2029. The mortgage interest deduction limit is now permanent, and Private Mortgage Insurance (PMI) will be treated as deductible mortgage interest beginning in 2026. These shifts together mean the math on itemizing has fundamentally changed for a wide range of homeowners who previously had no reason to bother.
How the Mortgage Interest Deduction Actually Works
The mortgage interest deduction can lower taxable income for eligible homeowners who deduct interest paid on a qualifying mortgage, and it generally applies only to interest on mortgages used to buy, build, or substantially improve a primary or secondary residence, up to certain loan limits.
You can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness. However, higher limitations of $1 million ($500,000 if married filing separately) apply if you are deducting mortgage interest from indebtedness incurred before December 16, 2017. For homeowners with larger mortgages or those in higher tax brackets, the savings can add up to thousands of dollars every year.
Standard Deduction vs. Itemizing: Running the Numbers
For the 2025 tax year, the standard deduction is $15,750 for single filers and $31,500 for married couples filing jointly. This means that you should only itemize if your total deductions exceed those amounts.
The SALT cap change means many homeowners who previously had no reason to itemize now may benefit significantly from doing so, and Form 1098 is central to that calculation. A homeowner in New Jersey who pays $18,000 in property taxes and $22,000 in mortgage interest now has $40,000 in potential deductions from just those two categories, well above the married filing jointly standard deduction. That’s a meaningful scenario for millions of households, not just a narrow edge case.
What Else Is Reported on the Form
The mortgage interest statement you receive should show not only the total interest paid during the year, but also your mortgage insurance premiums and deductible points paid during the year. Points paid at origination are often overlooked, even though they can add meaningfully to your deductible amount.
Points paid at closing and interest from home equity loans or lines of credit are deductible if used to buy, build, or substantially improve your home within these limits. For purposes of the deduction, mortgage debt includes home equity loans secured by a principal or second residence that are used to buy, build, or substantially improve a taxpayer’s home. Mortgage debt does not include home equity loans when the proceeds are used for purposes unrelated to the property. Interest associated with a home equity loan used to pay off a credit card balance, go on a vacation, or send a child to college does not qualify for the mortgage interest deduction.
Who Benefits Most From This Deduction
Congressional Research Service data indicate that nearly all, roughly 96.8%, of the benefit of the mortgage interest deduction is realized by homeowners with incomes of $100,000 or greater, and that more than three quarters of the benefit is realized by those with income of $200,000 or greater. The primary reason for the concentration of benefit above these income thresholds is the requirement that taxpayers must itemize to claim the deduction.
While almost all homeowners qualify for the mortgage interest tax deduction, you can only claim it if you itemize your deductions on your federal income tax return by filing a Schedule A with your Form 1040 or an equivalent form. The deduction’s value scales with both your loan size and your marginal tax rate, which is why higher earners have historically captured the bulk of the benefit.
How to Use Form 1098 When Filing
You enter your home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 8a. If you didn’t receive a Form 1098, you enter your deductible interest on line 8b and any deductible points on line 8c.
The borrower deducts Box 1 on Schedule A, subject to the acquisition indebtedness cap of $750,000 for loans after December 15, 2017, with $1,000,000 grandfathered for older loans. Choosing to itemize mortgage interest means having to itemize other sections of the tax return as well, which can add enough complexity to require an accountant. That’s worth factoring into your decision before tax season hits.
The Broader Cost of the Deduction to Federal Revenue
The mortgage interest deduction is one of the largest tax benefits available to homeowners in terms of forgone federal tax revenue. For fiscal year 2024, the Joint Committee on Taxation estimates that the deduction will reduce revenues by $25.4 billion, with the only larger housing-related tax expenditure being the exclusion for capital gains on the sale of a principal residence, at a fiscal year 2024 revenue cost of $38.1 billion.
After the TCJA limits expire, the revenue loss from the mortgage interest deduction is estimated to increase to $81.3 billion in 2026 and $100.6 billion in 2027. Those figures reflect how significantly the deduction’s reach expands as more taxpayers regain the ability to itemize under a higher SALT cap and a permanently structured deduction.
Final Thoughts
Form 1098 is a small piece of paper with outsized potential. It’s easy to overlook, especially if you’ve spent years taking the standard deduction without a second thought. The tax landscape for homeowners shifted in 2026 in ways that could genuinely move the needle for people who’ve had no reason to itemize since 2018.
Before you file this year, take a few minutes to locate your Form 1098, check what your lender has reported, and compare itemizing against your standard deduction. That envelope sitting unopened on your counter might actually be worth opening.
AI Disclaimer: This article was created with the assistance of AI tools and reviewed by a human editor.