Tax Deductions and Credits for Household Expenses in 2026

Owning a home can be expensive. Paying for property taxes, repairs and homeowners insurance can significantly reduce what you can spend on luxury items and discretionary goods and services. Fortunately, homeowners may be able to recoup some of the money they’ve lost by claiming tax deductions and credits.

A financial advisor with tax expertise can help you optimize your tax strategy for your financial goals and needs.

Home Office Deduction

Small business owners who work from home may qualify for the home office deduction. If you’re eligible, you may be able to deduct a portion of your homeowners association fees, utility bills, homeowners insurance premiums and the money you used to repair your home office. The amount you can deduct depends on several factors, including the percentage of your home that’s used exclusively for business.

Claiming the home office deduction won’t automatically trigger an IRS audit, but you’ll need to be careful. You’ll need to keep up with receipts, canceled checks and other documentation and be ready to prove that your home office isn’t used for another purpose that isn’t related to your business.

There are two methods to calculate this deduction:

Simplified method: Deduct $5 per square foot of your home office, up to a maximum of 300 square feet, resulting in a maximum deduction of $1,500.
Regular method: Determine the specific costs associated with your home office, including a share of your mortgage interest, utility bills, insurance, and depreciation, proportional to the portion of your home used for business purposes.

Tax Breaks for Homeowners

Home improvements may increase your property's value without providing an immediate federal tax break.

Owning a home has its perks. Homeowners can get a tax deduction for various expenses (although many of these tax breaks tend to favor the rich). If you qualify for the mortgage interest deduction, you can deduct mortgage interest on up to $1 million of debt (up to $500,000 if you and your spouse are filing separate tax returns) that accrued while you were buying or improving a first or second home before Dec. 16, 2017. Debt accrued after this date has limits of $750,000 and $375,000, respectively.

Another deduction can give homeowners a tax break for paying mortgage points. Homebuyers can pay points to reduce their mortgage rate. A single point is equal to 1% of a mortgage loan amount (which usually allows homebuyers to deduct 25% of their mortgage rate). If you purchased a house for $1 million or less, the full amount of mortgage points that you paid may be deductible.

To deduct mortgage points as prepaid interest, you must meet certain IRS requirements. For a primary residence, qualifying discount points may generally be deducted in full in the year you buy the home if you meet the IRS requirements. Points paid on a refinance are generally deducted over the life of the loan instead.

The deduction generally applies to discount points that reduce your mortgage interest rate, not origination points or other fees charged for processing the loan. You also must have paid the points with your own funds rather than money borrowed from the lender or mortgage broker.

Property Tax Deduction

In addition to claiming the deductions for paying mortgage interest and points, just about any property owner with land, a primary home, a secondary home or foreign property may be able to get a deduction for paying real estate taxes. Property taxes on a rental or investment property are still deductible, but as a business expense against your rental income on Schedule E, rather than as part of your personal itemized deductions.

If you split your property tax burden with the person who sold you a home, you can only write off the portion you actually paid. If you’ve been paying into an escrow account, you can only deduct the amount that your lender paid (this should be reflected on your property tax bill).

This deduction is part of the broader state and local tax (SALT) deduction, which also includes state and local income or sales taxes. The SALT deduction was long capped at $10,000 ($5,000 for married taxpayers filing separately), but the One Big Beautiful Bill Act (OBBBA) raised that cap substantially starting in 2025. For 2025, the cap is $40,000 ($20,000 for married filing separately), rising to $40,400 ($20,200 for married filing separately) in 2026. The cap increases by 1% each year through 2029 before reverting to $10,000 in 2030.

This higher cap does phase down for high earners: it’s reduced by 30% of the amount your modified adjusted gross income (MAGI) exceeds $500,000 in 2025 (rising to roughly $505,000 in 2026), or half those thresholds for separate filers. The deduction never drops below the original $10,000 floor ($5,000 for separate filers), even for the highest earners.

Claiming Tax Breaks for Household Expenses

Tax breaks for household expenses can offer meaningful savings, but the rules for claiming them in 2026 depend on IRS guidelines and current tax law. While many everyday costs aren’t deductible, certain expenses, like medical modifications or home office expenses, may qualify under specific conditions. The Energy Efficient Home Improvement Credit and Residential Clean Energy Credit are no longer available for new qualifying expenses after Dec. 31, 2025.

Some valuable household-related tax benefits may come through credits rather than deductions. Credits reduce your tax bill dollar for dollar, which makes them more impactful than deductions for many homeowners. While the two major federal home energy credits ended after 2025, other household-related credits may still be available in 2026 depending on the expense and your eligibility.

Home office deductions may apply for self-employed individuals who use a dedicated space exclusively for business. These deductions can cover a portion of utilities, insurance, rent or mortgage interest, depending on how the space is calculated. Employees who work from home typically cannot claim this deduction under current law, so understanding your employment status is key.

Know What You Can’t Deduct

Qualifying home improvements and certain home office expenses may provide tax benefits in 2026.

While it’s tempting to assume that any home-related expense might reduce your tax bill, the IRS has strict rules about what doesn’t qualify. Everyday costs like lawn care, routine repairs, mortgage principal payments and general home improvements typically aren’t deductible unless they meet very specific criteria, such as accommodating medical needs. These expenses may enhance your home’s value or comfort, but they don’t offer immediate tax relief.

It’s also important to note that most personal living expenses, such as groceries, housekeeping services and home décor, cannot be written off under current tax law. Even large projects like kitchen remodels or roof replacements aren’t deductible unless tied to rental activity or business use of your home. Knowing what falls outside the rules can help you avoid mistakes on your return and focus your tax planning on expenses that truly qualify. If you’re unsure whether a cost is deductible, consulting a tax professional can provide clarity before you make a claim.

Bottom Line

Household tax breaks may help reduce your 2026 tax bill when you have qualifying expenses. However, homeowners can no longer claim the Energy Efficient Home Improvement Credit or Residential Clean Energy Credit for new qualifying expenses in 2026. Certain home office costs and other eligible expenses may still provide tax benefits, while ordinary personal expenses generally don’t qualify. Keeping records of eligible purchases and expenses can make it easier to claim available deductions or credits. A tax professional or financial advisor with tax expertise can help you determine which tax breaks may apply to your situation.

Tips for Managing Your Finances During Tax Season

A financial advisor can be a key resource in helping you figure out your taxes. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you don’t know whether you’re better off with the standard deduction versus itemized, you might want to read up on it and do some math. You could save a significant amount of money by educating yourself before the tax return deadline.
SmartAsset has you covered with a number of free online tax resources to help you during tax season. Check out our income tax calculator and get started today.