Maximizing Your Homeowner Deductions: A Guide for New Haven Families in 2026

New Haven, CT : January 2026 : If you own a home in New Haven, your 2026 tax filing just got a whole lot more interesting. Between expanded deduction caps and new rules, there's real money on the table for families who know where to look.

Let's break down everything you need to know about New Haven homeowner tax deductions for the 2026 filing season. No fluff, just the good stuff.

The Big News: SALT Deduction Cap Jumps to $40,000!

Here's the headline you've been waiting for. The state and local tax (SALT) deduction cap has expanded from $10,000 to $40,000 for tax years 2025-2029. This is huge for Connecticut homeowners.

Why does this matter for New Haven families? Connecticut has some of the highest property taxes in the nation. Under the old $10,000 cap, many homeowners couldn't deduct their full property tax bill. Now you can deduct up to:

• $40,000 for single filers and married couples filing jointly
• $20,000 for married filing separately

Important note: This deduction phases out for households with adjusted gross income (AGI) over $500,000. If your income approaches this threshold, consult a tax professional to understand how this affects your situation.

The SALT deduction covers the combination of:

• Property taxes
• State and local income taxes
• Sales taxes (whichever combination works best for you)

Mortgage Interest Deduction: Still a Heavy Hitter

The mortgage interest deduction remains one of the most valuable tax breaks available to homeowners. You can deduct interest paid on up to $750,000 of mortgage debt ($375,000 if married filing separately).

Here's the catch: You'll only benefit from this deduction if you itemize. Since the 2017 Tax Cuts and Jobs Act nearly doubled the standard deduction, fewer homeowners find itemizing worthwhile.

For 2026 filing, the standard deduction is:

• $31,500 for married couples filing jointly
• $15,750 for single filers

Quick math: Add up your mortgage interest, property taxes (now up to $40,000), charitable donations, and other itemizable expenses. If that total exceeds your standard deduction, itemize. If not, take the standard deduction and move on.

New for 2026: PMI Is Now Deductible!

Did you put down less than 20% on your home? Good news. Private mortgage insurance (PMI) is now treated as deductible mortgage interest under the "One Big Beautiful Bill."

This change benefits first-time homebuyers and anyone who purchased with a smaller down payment. Check your mortgage statements to find your PMI payments and add them to your deductible mortgage interest total.

Home Equity Loan Interest: Know the Rules

If you have a home equity loan or home equity line of credit (HELOC), the interest may be deductible: but only under specific conditions.

Deductible: Interest on funds used for qualifying home improvements (renovations, additions, major repairs)

Not deductible: Interest on funds used for debt consolidation, vacations, car purchases, or other non-home-related expenses

Keep detailed records of how you used your home equity funds. If the IRS questions your deduction, you'll need documentation showing the money went toward your home.

Home Office Deduction: Self-Employed Only

Work from home? You might qualify for valuable home office deductions: but only if you're self-employed.

Self-employed homeowners can deduct business-related expenses including:

• A portion of rent or mortgage interest
• Utilities
• Real estate taxes
• Home insurance
• Repairs and maintenance (proportional to office space)

Critical limitation: W-2 employees working from home are not eligible for the home office deduction. This applies even if your employer requires you to work remotely.

To calculate your deduction, determine what percentage of your home is used exclusively for business. Use that percentage to calculate deductible expenses.

Medical Home Improvements: An Often-Overlooked Deduction

Homeowners can deduct the cost of medically necessary home modifications. These include:

• Wheelchair ramps
• Grab bars and handrails
• Widened doorways
• Accessible bathroom modifications
• Stair lifts
• Health care equipment installation

These deductions fall under medical expenses, which are deductible to the extent they exceed 7.5% of your AGI. Keep receipts and documentation from your healthcare provider explaining why the modification was necessary.

Energy Tax Credits: You Missed the Deadline

Here's news you may not want to hear. Energy-focused home improvement tax credits expired at the end of 2025.

To claim these credits on your 2025 return (filed in 2026), you must have completed the energy upgrades by December 31, 2025: not just purchased them. This includes:

• Solar panel installation
• Insulation improvements
• Energy-efficient windows and doors
• Heat pumps and HVAC systems

If you completed qualifying improvements before the deadline, file for the credits. If not, these incentives are no longer available for future installations under current law.

What You Cannot Deduct

Don't make the mistake of claiming deductions that aren't allowed. Homeowners cannot deduct:

• Fire, comprehensive, or title insurance
• Principal payments on your mortgage
• Utilities (gas, electricity, water)
• General home repairs and maintenance
• Closing costs
• HOA or condo association fees
• Internet or Wi-Fi service
• Landscaping and lawn care

Attempting to deduct non-qualifying expenses may lead to penalties, additional taxes owed, and potential audits. When in doubt, check with a tax professional.

Bonus Deduction: Age 65 or Older

If you or your spouse is 65 or older, you receive an additional standard deduction:

• $2,000 extra for single filers 65+
• $1,600 per spouse if filing jointly and one or both are 65+

This bonus applies whether you itemize or take the standard deduction. Don't overlook this: it's free money.

Your 2026 Homeowner Tax Checklist

Use this checklist to gather documents before filing:

1. Form 1098 : Mortgage interest statement from your lender
2. Property tax bills : Annual statements showing taxes paid
3. PMI statements : If applicable, from your lender
4. Home equity loan records : Interest paid and documentation of how funds were used
5. Home office measurements : Square footage of dedicated workspace
6. Medical improvement receipts : Invoices and physician documentation
7. Energy improvement records : Completion dates and receipts for 2025 projects
8. State income tax records : W-2s showing Connecticut withholding

Should You Itemize or Take the Standard Deduction?

Here's a simple decision framework:

Step 1: Add up your itemizable expenses:

• Mortgage interest
• Property taxes (up to $40,000)
• State income taxes
• Charitable donations
• Medical expenses (above 7.5% of AGI)

Step 2: Compare to your standard deduction ($31,500 married filing jointly, $15,750 single)

Step 3: Choose whichever is higher

For many New Haven homeowners, the expanded SALT cap tips the scales toward itemizing. Run the numbers both ways before deciding.

Get Expert Help with Your 2026 Filing

The expanded SALT deduction and new PMI rules create real opportunities for New Haven families: but only if you file correctly. Missing a deduction leaves money on the table. Claiming the wrong deduction can delay processing or trigger penalties.

At Jose's Tax Service, we help New Haven homeowners maximize their refunds while staying compliant. Whether you're a first-time filer or dealing with complex deductions, we've got you covered.

Ready to file? Stop by our office or schedule a consultation today. Let's make sure you're getting every dollar you deserve.