Itemizing vs. the standard deduction
Your mortgage only saves you tax once your deductions clear the standard deduction line — here's how far past it you land.
Federal return
California return
Why California is different
The federal government limits mortgage-interest deductions to $750,000 of debt. California never adopted that limit.
Tax savings over the life of the loan
Your balance amortizes, so deductible interest — and the tax break it creates — shrinks every year, even as property tax slowly rises.
True monthly cost of homeownership
Year-one numbers, tax savings spread evenly across 12 months.
Renting vs. buying, side by side
What a comparable rental costs vs. your true cost of owning, after the tax break — everything totaled out.
Tax year: 2025 (filed in 2026), reflecting the One Big Beautiful Bill Act (OBBBA) signed July 2025.
- Federal SALT cap: raised to
$40,000for 2025 (phasing down 30¢ per $1 of income above $500,000 MAGI, floor$10,000), covering property tax plus an estimate of CA state income tax paid. - Federal mortgage interest cap:
$750,000of acquisition debt, made permanent by the OBBBA. - California mortgage interest cap: California never conformed to the federal Tax Cuts and Jobs Act — it still allows interest on up to
$1,000,000of acquisition debt, with no SALT-style cap on the property tax deduction at all. - Federal standard deduction (2025): Single/MFS $15,750 · Married filing jointly $31,500 · Head of household $23,625.
- California standard deduction (2025): Single/MFS $5,540 · Married filing jointly $11,080 · Head of household $11,412.
- California brackets: 1%–12.3% progressive schedule, plus a separate 1% Mental Health Services Tax on taxable income over $1,000,000 — a threshold that is not doubled for joint filers.
- California's high-income itemized deduction limitation: above
$169,730AGI (single/MFS),$254,599(head of household), or$339,464(married filing jointly), California reduces total itemized deductions by the lesser of 6% of the AGI excess or 80% of the itemized total — modeled here and called out on the page whenever it applies to your numbers. - Head of household California brackets are estimated (interpolated between the single and married-filing-jointly schedules, which is how the FTB's own Schedule Z is described relative to Schedules X and Y) since a full official Schedule Z table wasn't accessible while building this — treat HOH results as directional.
- County property tax presets are typical effective rates (the Prop 13 base rate plus average local voter-approved bonds/assessments) — actual bills vary by city and district, so use the slider to match your specific property when you know it.
- Property tax is assumed to grow 2%/year under Proposition 13's cap on assessed-value increases. Deductible interest each year uses the IRS's average-balance method against the debt limit.
- Income, filing status, and the CA-tax-paid estimate are held flat across the loan term for simplicity. The calculator does not model AMT or NIIT. A separate new federal itemized-deduction limitation for top-bracket (37%) filers begins in tax year 2026 under the OBBBA and is not yet reflected here, since this tool models 2025.
This is an educational estimate, not tax advice. Real returns depend on your full tax picture — talk to a CPA before making a decision based on these numbers. Rudy Flores is a licensed California real estate agent with Coldwell Banker West (DRE# 02257808) and not a tax professional.