Many states across the country are still working to recover from the housing crisis of the late 2000s. To help more families avoid foreclosure, the federal government is considering reforming the MID, or Mortgage Interest Deduction, which would benefit low- and moderate-income taxpayers. This credit will affect everyone in all tax brackets in different ways.

The Proposal

The Tax Policy Center has proposed three different ways to reform the MID and help people keep their homes. One of these proposals involves completely replacing the MID with a 15% non-refundable credit for any mortgage valued at $500,000 or less. Currently, this credit is available for mortgages valued at $1 million or less. Government officials feel that more households would be able to benefit this way, although the average subsidy would be significantly lower than today’s MID. It would also raise taxes by some $240 billion nationwide over the next decade. read more