Skip to Content
Streetsblog USA home
Streetsblog USA home
Log In
Around the Block

Why the Mortgage Interest Tax Deduction Has Got to Go

The mortgage interest deduction costs the federal government much more than rental assistance for low-income people.

While the Trump administration pursues massive cuts to HUD that threaten urban neighborhoods, especially poorer ones, there's one form of housing assistance that the White House is much less enthusiastic about reducing: the mortgage interest tax deduction.

The mortgage interest deduction costs the federal government more than all rental subsidies combined, writes David Meni at Greater Greater Washington. And all that money promotes sprawl by encouraging people to buy more house, while transferring wealth to the upper tiers of the income ladder.

While there is bi-partisan support among think tanks for reforming this tax break, the politics of overhauling such a massive giveaway to the affluent are exceptionally difficult. Meni breaks down why the mortgage interest deduction is so regressive:

The MID is currently projected to be a $96 billion program by 2019. And as we recapped in that earlier post, nearly all of that spending goes to high-earners with large mortgages.

This staggering inequity is because of how the benefit is designed. You can only claim the deduction if you itemize your expenses, something that only those with higher incomes tend to do. As a result, the value of the benefit actually goes up as your income rises. This means that the MID actually incentives mortgage debt, rather than homeownership -- you get a larger benefit if you have a more expensive mortgage.

As a result of all these policy design choices, someone making millions of dollars a year -- even if they have multiple homes -- gets an average of $1,236 per month from the MID. That could cover most or all of a month’s rent for low-income households, whose average share is just eight cents, if they can get the benefit at all.

For someone with a $1 million mortgage, the MID means that the federal government gives you back about $22,000 a year -- enough to push a family of three above the poverty line.

More recommended reading today: Streets.mn says the focus on "distracted walking" is a distraction from the real threats that make walking so dangerous. And Bike Portland reports on some good news from Oregon state legislature which should clear the way for a 20 mph default residential speed limit in the city.

Stay in touch

Sign up for our free newsletter

More from Streetsblog USA

Monday’s Headlines E-Biking Away

There's a million destinations if we had a little help from the government to afford to buy an e-bike.

July 28, 2025

Trump is Exploiting a Very Real Trucking Safety Concern to Crack Down on Immigrants: Advocates

The Trump administration will crack down on truck drivers who don't speak English and the people who give them licenses. Some advocates say that anti-immigrant spin is distracting much broader safety problems that deserve bipartisan support.

July 28, 2025

Op Ed: It’s Time to Pause Highway Construction Nationwide and Try Something New

We don't have to swear off highway construction forever to make a dent in car dependency. A new report calls for a temporary moratorium on asphalt — and outlines how to get there.

July 28, 2025

Krakow is a Polish Pedestrian Paradise

Check out how car drivers simply stop for pedestrians — and not just pedestrians in a crosswalk, but also pedestrians about to enter a crosswalk or even just thinking about maybe entering a crosswalk.

July 25, 2025

Friday Video: The Secret to Getting People Biking In a Hilly City

Steep streets don't have to put a stop to your city's cycling future.

July 25, 2025

Friday’s Headlines Look to the Future

Despite some minor reforms around the edges under President Biden, U.S. transportation remains a car-centric anachronism.

July 25, 2025
See all posts