Is HELOC interest tax deductible in 2026? Updated rules for homeowners.

A home equity line of credit, or HELOC, lets you borrow against the equity in your home. Like a mortgage, it comes with interest that can add up quickly.

Whether HELOC interest is tax-deductible for homeowners depends on how the money is used and how current IRS rules apply as key provisions of the Tax Cuts and Jobs Act approach their scheduled expiration. Here’s what to know before you file.

Learn more: What is a home equity line of credit, and how does a HELOC work?

The short answer is yes: HELOC interest is tax deductible — but there are limits. According to the IRS, HELOC interest could be tax deductible if you use the money you receive to “buy, build, or substantially improve” your home. If you use the funds for other purposes — such as paying off your credit card debt or medical bills — the interest won’t qualify for a deduction. Below are some more rules you must follow to qualify.

Read more: How the mortgage interest tax deduction works

The rules for HELOC interest tax deductions changed after the Tax Cuts and Jobs Act (TCJA) was passed in late 2017.

If you took out a HELOC on or before Dec. 15, 2017, you could file deductions on interest paid on up to $1 million of your home loan debt ($500,000 if you’re married and filing separately), regardless of how you use the funds.

The TCJA tightened those limits. So if you took out a HELOC after Dec. 15, 2017, on your primary or second home, you can deduct interest paid on up to $750,000 of qualified loans ($375,000 if you’re married and filing separately), but only if you used the money to buy, build, or improve your property. These limits apply to your combined residential debt, including first mortgages, home equity loans, and HELOCs.

So let’s say you’ve borrowed more than the TCJA limit. For example, you bought a house in 2019 with a $700,000 mortgage and borrowed $100,000 with a HELOC in 2022 to make significant home improvements. Your combined total mortgage balance is $800,000, so you cannot claim all interest paid. However, you should still be able to deduct interest paid on the first $750,000. It’s always wise to check in with a tax pro to be sure.

Read more: Are closing costs tax deductible?

Here’s what you should do if you plan to claim the home equity line of credit interest tax deduction.

First, make sure your HELOC qualifies for an interest tax deduction. As mentioned, things like the total amount of your home debt, what you’re using the HELOC for, and when you opened the line of credit would all factor into whether you’re eligible for a deduction. Review the guidelines above or talk to a tax professional to ensure you’re in the clear.

Taxpayers must itemize their deductions to claim the HELOC interest tax deduction — you can’t deduct HELOC interest if you opt for the standard tax deduction.

If the total of your itemized deductions is lower than your standard deduction, it wouldn’t make financial sense to itemize. But if the total of your itemized deductions is higher than your standard deduction, you’ll want to use Form 1040, Schedule A, to itemize them.

Dig deeper: Standardized deduction vs. itemized — How to decide which is better

3. Gather your documents and receipts

Having the proper documents makes it easier to report your HELOC deduction accurately — and they’ll also be necessary should the IRS ever audit you. Make sure you have the following documents:

Form 1098, which details the mortgage interest you’ve paid over the year
Form 1040 for itemizing your deductions
Any relevant receipts or bank statements

The IRS recommends keeping your tax documents and records for at least two years from the date you paid the tax or three years from filing your tax return, whichever is later.

Learn more: 8 tax deductions for homeowners

Short answer: sometimes. HELOC interest is generally deductible only if you use the money to buy, build, or substantially improve the home that secures the loan. Using it for things like credit card payoff, travel, or tuition usually doesn’t qualify. The big caveat for 2026 is that tax rules can change, so it’s smart to double-check current IRS guidance before filing.

Unfortunately, no. If you take the standard deduction, you can’t deduct HELOC interest. To write off that interest, you have to itemize deductions on Schedule A. That’s why many homeowners don’t see a tax benefit from their HELOC, even if the interest technically qualifies under IRS rules.

Usually, yes, but not always. If you paid $600 or more in interest during the year, your lender will typically send you a Form 1098 showing how much interest you paid. If you paid less than that, a 1098 might not be issued. Either way, you’re still responsible for reporting deductible interest correctly on your tax return.