The Mortgage Interest Deduction in 2026: What Kentucky Homeowners Should Know

For many Kentucky homeowners, the mortgage interest deduction is one of the financial perks of owning instead of renting. But the rules have changed over the years, and not every homeowner benefits. Here is a plain-English look at how the deduction works in 2026.

What Is the Mortgage Interest Deduction?

The mortgage interest deduction lets homeowners who itemize their federal taxes deduct the interest paid on a qualified home loan. To benefit, your total itemized deductions must exceed the standard deduction—otherwise, taking the standard deduction is the better move.

The 2026 Limits

• $750,000 acquisition debt limit: You can deduct interest on up to $750,000 of mortgage debt used to buy, build, or substantially improve your home ($375,000 if married filing separately). This limit was made permanent under recent tax law.
• Older loans: Mortgages taken out on or before December 15, 2017 may still qualify under the prior $1 million limit.
• The loan must be secured by a qualified home (your main home or a second home).

Because most homes in Laurel County and the surrounding area are priced well below the $750,000 cap, the vast majority of local buyers can deduct all of their mortgage interest—if they itemize.

Does It Actually Help You?

With today's larger standard deduction, many homeowners with modest mortgages find the standard deduction gives them a bigger break. The deduction tends to matter most in the early years of a loan, when interest makes up the largest share of your payment, and for buyers with larger balances. A tax professional can run the numbers for your situation.

The Bigger Picture for Kentucky Buyers

The mortgage interest deduction is one of several reasons homeownership builds long-term wealth. If you are weighing a purchase, start with our first-time home buyer's guide to Laurel County and learn about KHC down payment assistance. To understand all the upfront numbers, see buyer closing costs in Kentucky.

The deduction is also a long-standing REALTOR® advocacy priority—learn why in our post on RPAC and Kentucky homeowners.

Sources

• IRS Publication 936 — Home Mortgage Interest Deduction

This is general information, not tax advice. Tax rules are complex and change—consult a licensed tax professional about your situation. Thinking about buying in Laurel County? Contact Wes Williams at Williams Elite Realty.