Mortgage Insurance Deduction Doubled for Middle-Income Homeowners, Made Permanent Post-2025

The aptly named Middle Class Mortgage Insurance Premium Act of 2025 is a straightforward piece of legislation that tackles two major headaches for homeowners who pay Private Mortgage Insurance (PMI).

The "What": Making PMI Deductions Permanent and Accessible

This bill does two very important things for your tax return, though you won't see the changes until the 2026 tax season rolls around (it applies to tax years starting after December 31, 2025). First, it makes the deduction for mortgage insurance premiums permanent. Previously, this tax break was temporary and constantly needed to be renewed by Congress, creating uncertainty. By striking the expiration clause (Section 2, striking clause (iv)), the bill locks this deduction into the tax code for good.

Second, and perhaps more significantly for middle-income earners, it dramatically raises the income ceiling for who can actually claim this deduction. PMI is typically required when you put down less than 20% on a home, meaning it’s a cost borne by many first-time buyers and those who need to leverage their financing. Under the old rules, the deduction started phasing out if your Adjusted Gross Income (AGI) exceeded $100,000 for married couples filing jointly, or $50,000 for single filers. This bill essentially doubles those caps.

Who Gets the Break: Doubling the Income Ceiling

Under this new structure, married couples filing jointly can now earn up to $200,000 before the deduction starts to disappear. For single filers or those filing as head of household, the new limit is $100,000. This is a huge shift that brings a lot more people—especially those in higher-cost-of-living areas or dual-income households—into the eligibility window.

Think about a young couple in a mid-sized city, both working in professional fields, earning $80,000 each. Under the old $100,000 cap, they were already phased out of the deduction, even though they are squarely in the middle class and likely grappling with a hefty mortgage and PMI payments. Under the new $200,000 cap, they can claim the full deduction, which could save them hundreds of dollars a year. This is real money that can be put toward childcare, retirement, or paying down the principal faster.

The Takeaway for Homeowners

This legislation is a clear win for middle-income homeowners paying PMI. Making the deduction permanent removes the annual anxiety about whether Congress will renew the tax break, providing stability and predictability. Expanding the income caps recognizes the reality of modern household incomes, especially in a time of rising home prices. While the bill does mean the federal government will collect less tax revenue, the benefit is directly targeted at relieving the financial burden on the demographic it's named after: the middle class, specifically those who are still paying off the insurance required to finance their homes.