Loan & Credit Line Tax Savings Calculator

This Loan and Credit Line Tax Savings Calculator will determine your potential tax savings on home equity loans or lines of credit with tax-deductible interest. Most borrowers are aware that interest paid on home equity debt is tax-deductible, but figuring what their tax savings will be can be a challenge. This calculator is designed to do that for you.

By changing any value in the following form fields, calculated values are immediately provided for displayed output values. Click the view report button to see all of your results.

Your first year tax savings is $467.

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Loan & credit line inputs:

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Calculate:

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Payment

Loan Amount

Payment option:*This entry is Required.

Loan amount:*This entry is Required.Enter an amount between $0 and $250,000,000

Monthly payment:

Interest rate:*This entry is Required.Enter an amount between 0% and 25%

Term in months:*This entry is Required.Enter an amount between 1 and 360

Federal tax rate:*This entry is Required.Enter an amount between 0% and 50%

State tax rate:*This entry is Required.Enter an amount between 0% and 50%

Calculation results:
First Year Savings: $466.76, Total tax savings: $1,118.27

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Principal Balances for a $20,000 loan Column Graph: Please view the report to see detailed calculation results in tabular form.

Principal Balances for a $20,000 loan

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Get your Rates!

Definitions

Loan amount

Total dollar amount of your loan or line of credit.

Interest rate (APR)

The annual percentage rate for this loan or line of credit.

Monthly payment

This is the monthly payment for this loan or line of credit. For lines of credit the payment can change month to month based on the current outstanding balance. This is the case with a line payment calculated on the amount of interest owed or as a percentage of the principal balance.

Term in months

Number of months for this loan or line of credit.

Federal tax rate

The marginal federal tax rate you expect to pay.

State tax rate

The marginal state tax rate you expect to pay.

Payment options

Payment options for your loan or line of credit. Each option uses a different method to calculate your monthly payment. Please note that only the fixed loan term will pay off your balance by the end of the payment term.

Fixed loan term: Traditional amortization produces a fixed monthly payment. The monthly payment calculated will leave a zero balance at the end of the loan's term.
2%, 1.5% or 1% of balance: Your minimum payment is calculated as a percentage of the outstanding principal balance. Your minimum payment will change each month, and if you only make the minimum payment your balance will not be zero at the end of your loan's term.
100% of interest owed: For lines paying interest owed, your payment is 100% of the interest accrued during the month but no principal. Your payment may not be fixed if your interest rate or principal balance changes.

Tax savings

Tax savings assumes that you qualify for a home interest deduction and that you itemize your taxes on schedule A of your Federal tax return. Total tax savings may be less for higher incomes which have their allowable itemized deductions phased out. Your total tax savings may also be reduced if you prepay your loan.

Loan & Credit Line Tax Savings Calculator Overview

Generally, the interest paid on a home equity loan or home equity line of credit (HELOC) is tax-deductible for borrowers who itemize deductions. Single borrowers may deduct the interest paid on up to $50,000 in home equity debt, exclusive of their primary mortgage, while couples filing jointly can deduct interest paid on up to $100,000 in home equity debt. Other rules may apply, so you should consult your tax advisor to determine what guidelines apply to your specific tax situation as it relates to loans and credit lines.

More detailed explanations of the tax deductibility guidelines for home equity loans and HELOCs are provided at the bottom of the page, which may help clarify things for you. If you're not sure if you're eligible, check the explanations in the last two sections on this page.

How to Use the Loan & Credit Line Tax Savings Calculator

Here's what to do:

First, decide whether you want to calculate based on your monthly payment, or your loan amount – and select the appropriate choice
Choose your payment option from the drop-down list – for most people the default option of ‘a fixed term loan’ will be appropriate
Depending on the option you selected at stage 1, enter wither the Loan amount or your monthly payment
Add the interest rate that you are paying on your loan or credit line, and the term in months
Input your federal tax rate and state tax rate
Click "View Report" to see how much tax you could be saving.

If you like what you see, feel free to click the "Get FREE Quote" button to find out what kind of terms you would be offered on your loan.

Who is this Calculator for?

This calculator is most useful if you:

Are taking out a home equity line of credit (HELOC) and would like to calculate the potential interest savings you can make via tax deduction
Want to see a clear breakdown of your loan or line of credit amortization schedule

Under what circumstances are HELOC interest payments tax deductible?

Interest paid on home equity loans and lines of credit totalling $100,000 or less that were taken out after October 13, 1987 is usually tax-deductible for couples filing jointly. For single filers or married persons filing separate returns, the maximum threshold goes down to $50,000. Either way, the amount must not exceed the fair market value of the property, minus the grandfathered debt and home acquisition debt.

What is grandfathered debt and home acquisition debt?

Grandfathered debt is simply the term commonly used to describe mortgages taken out before October 13, 1987. Home acquisition debt includes mortgages taken out after this date for the purpose of buying, building or improving a property. The maximum threshold for home acquisition debt to be tax deductible is $1 million, or $500,000 if you are single or married filing separately.

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