Cap Kentucky qualified residence interest at principal-residence interest from 2026

changelog.d/delaware-mortgage-premium-allocation.fixed.md

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+Allocate Delaware mortgage insurance premiums after the federal phase-out to the spouse who paid them, using payments on both qualified residences.

changelog.d/ky-principal-residence-mortgage-interest.added.md

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+Add `second_residence_mortgage_interest`, `second_residence_mortgage_points` and `second_residence_mortgage_insurance_premiums` inputs, which join the federal mortgage deduction, and from 2026 cap Kentucky's qualified residence interest deduction at the interest paid on the principal residence (KRS 141.019(2)(j); 2026 Ky. Acts ch. 161 sec. 7, as amended by ch. 198 sec. 48).

changelog.d/points-mortgage-insurance-premium-inputs.added.md

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+Add `home_mortgage_points` and `mortgage_insurance_premiums` inputs. Points are deducted as home mortgage interest under the acquisition-debt caps. Qualified mortgage insurance premiums are deducted under 26 U.S.C. 163(h)(3)(E) with its AGI phase-out, in 2007–2021 and again from 2026 (P.L. 119-21, sec. 70108).

changelog.d/state-mortgage-insurance-exclusions.fixed.md

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+Exclude federally deductible mortgage insurance premiums from California, New York, Minnesota, Wisconsin, Arkansas, and Iowa itemized deductions or credits in years those states disallow them.

changelog.d/state-mortgage-insurance-inclusions.fixed.md

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+Include qualified mortgage insurance premiums in Montana and Alabama interest deductions, in North Carolina from 2026, and in Hawaii through 2021, using Hawaii adjusted gross income for its phase-out.

policyengine_us/parameters/gov/irs/deductions/itemized/interest/mortgage_insurance_premiums/in_effect.yaml

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+description: The IRS treats qualified mortgage insurance premiums as deductible qualified residence interest if this is true.
+values:
+  1900-01-01: false
+  # Premiums paid or accrued after December 31, 2006, under contracts issued
+  # after that date (P.L. 109-432, sec. 419).
+  2007-01-01: true
+  # 163(h)(3)(E)(iv): no deduction for amounts paid or accrued after
+  # December 31, 2021.
+  2022-01-01: false
+  # P.L. 119-21, sec. 70108: 163(h)(3)(F)(i)(III) turns off clause (iv) for
+  # taxable years beginning after December 31, 2025.
+  2026-01-01: true
+metadata:
+  unit: bool
+  period: year
+  label: IRS mortgage insurance premiums deduction in effect
+  reference:
+    - title: 26 U.S. Code § 163(h)(3)(E) - Mortgage insurance premiums treated as interest
+      href: https://www.law.cornell.edu/uscode/text/26/163#h_3_E
+    - title: 26 U.S. Code § 163(h)(3)(F)(i)(III)
+      href: https://www.law.cornell.edu/uscode/text/26/163#h_3_F_i_III
+    - title: Public Law 119-21, sec. 70108
+      href: https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.pdf#page=93
+    - title: 2021 Instructions for Schedule A (Form 1040), line 8d
+      href: https://www.irs.gov/pub/irs-prior/i1040sca--2021.pdf#page=9
+    - title: 2025 Publication 936, Reminders
+      href: https://www.irs.gov/pub/irs-pdf/p936.pdf#page=1

policyengine_us/parameters/gov/irs/deductions/itemized/interest/mortgage_insurance_premiums/phase_out/increment.yaml

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+description: The IRS reduces the qualified mortgage insurance premiums deduction for each of these amounts, or fraction thereof, by which adjusted gross income exceeds the phase-out start, based on filing status.
+SINGLE:
+  2007-01-01: 1_000
+JOINT:
+  2007-01-01: 1_000
+SEPARATE:
+  2007-01-01: 500
+HEAD_OF_HOUSEHOLD:
+  2007-01-01: 1_000
+SURVIVING_SPOUSE:
+  2007-01-01: 1_000
+metadata:
+  propagate_metadata_to_children: true
+  breakdown: filing_status
+  unit: currency-USD
+  period: year
+  label: IRS mortgage insurance premiums deduction phase-out increment
+  reference:
+    - title: 26 U.S. Code § 163(h)(3)(E)(ii) - Phaseout
+      href: https://www.law.cornell.edu/uscode/text/26/163#h_3_E_ii
+    - title: 2021 Instructions for Schedule A (Form 1040), Mortgage Insurance Premiums Deduction Worksheet line 4
+      href: https://www.irs.gov/pub/irs-prior/i1040sca--2021.pdf#page=10

policyengine_us/parameters/gov/irs/deductions/itemized/interest/mortgage_insurance_premiums/phase_out/rate.yaml

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+description: The IRS reduces the qualified mortgage insurance premiums deduction by this share of the premiums for each phase-out increment by which adjusted gross income exceeds the phase-out start.
+values:
+  2007-01-01: 0.1
+metadata:
+  unit: /1
+  period: year
+  label: IRS mortgage insurance premiums deduction phase-out rate
+  reference:
+    - title: 26 U.S. Code § 163(h)(3)(E)(ii) - Phaseout
+      href: https://www.law.cornell.edu/uscode/text/26/163#h_3_E_ii
+    - title: 2021 Instructions for Schedule A (Form 1040), Mortgage Insurance Premiums Deduction Worksheet line 5
+      href: https://www.irs.gov/pub/irs-prior/i1040sca--2021.pdf#page=10

policyengine_us/parameters/gov/irs/deductions/itemized/interest/mortgage_insurance_premiums/phase_out/start.yaml

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+description: The IRS reduces the qualified mortgage insurance premiums deduction when adjusted gross income exceeds this amount, based on filing status.
+SINGLE:
+  2007-01-01: 100_000
+JOINT:
+  2007-01-01: 100_000
+SEPARATE:
+  2007-01-01: 50_000
+HEAD_OF_HOUSEHOLD:
+  2007-01-01: 100_000
+SURVIVING_SPOUSE:
+  2007-01-01: 100_000
+metadata:
+  propagate_metadata_to_children: true
+  breakdown: filing_status
+  unit: currency-USD
+  period: year
+  label: IRS mortgage insurance premiums deduction phase-out start
+  reference:
+    - title: 26 U.S. Code § 163(h)(3)(E)(ii) - Phaseout
+      href: https://www.law.cornell.edu/uscode/text/26/163#h_3_E_ii
+    - title: 2021 Instructions for Schedule A (Form 1040), Mortgage Insurance Premiums Deduction Worksheet line 3
+      href: https://www.irs.gov/pub/irs-prior/i1040sca--2021.pdf#page=10

policyengine_us/parameters/gov/states/ar/tax/income/deductions/itemized/disallowed_interest_components.yaml

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+description: >-
+  Arkansas excludes these federal interest components from itemized deductions
+  under its fixed January 1, 2017, Internal Revenue Code conformity. Act 155 of
+  2017 section 19 replaced the earlier January 1, 2015, conformity date, but
+  section 25 applies the change retroactively from tax year 2015. Premiums
+  therefore remain deductible for 2015 and 2016 under the federal extension
+  enacted in P.L. 114-113, division Q, section 152.
+values:
+  1900-01-01: []
+  2017-01-01:
+    - deductible_mortgage_insurance_premiums
+metadata:
+  unit: list
+  period: year
+  label: Arkansas disallowed federal interest components
+  reference:
+    - title: "Arkansas Act 155 of 2017, sections 19 and 25, interest conformity and retroactive effective date #page 9-10"
+      href: https://arkleg.state.ar.us/Home/FTPDocument?path=%2FACTS%2F2017R%2FPublic%2FACT155.pdf#page=9
+    - title: Arkansas Act 580 of 2015, section 17, earlier January 1, 2015, interest conformity date
+      href: https://www.arkleg.state.ar.us/Home/FTPDocument?path=%2FACTS%2F2015%2FPublic%2FACT580.pdf#page=7
+    - title: P.L. 114-113, division Q, section 152, mortgage insurance premium extension through 2016
+      href: https://www.govinfo.gov/content/pkg/PLAW-114publ113/html/PLAW-114publ113.htm
+    - title: 2021 Arkansas Individual Income Tax Instructions, AR3 interest expense
+      href: https://www.dfa.arkansas.gov/wp-content/uploads/2021_AR1000F_and_AR1000NR_Instructions.pdf#page=20

policyengine_us/parameters/gov/states/hi/tax/income/deductions/itemized/mortgage_insurance_premiums/in_effect.yaml

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+description: Hawaii allows this qualified mortgage insurance premium deduction.
+values:
+  1900-01-01: false
+  2007-01-01: true
+  2022-01-01: false
+metadata:
+  unit: bool
+  period: year
+  label: Hawaii mortgage insurance premiums deduction in effect
+  reference:
+    - title: Hawaii Department of Taxation Announcement 2021-01
+      href: https://files.hawaii.gov/tax/news/announce/ann21-01.pdf
+    - title: Hawaii 2021 Digest of Tax Measures, IRC 163(h)(3)(E)(iv)(I)
+      href: https://files.hawaii.gov/tax/legal/legis/2021/21digest.pdf#page=9
+    - title: HRS 235-2.4(j), IRC 163(h)(3)(F) is inoperative
+      href: https://data.capitol.hawaii.gov/hrscurrent/Vol04_Ch0201-0257/HRS0235/HRS_0235-0002_0004.htm

policyengine_us/parameters/gov/states/ia/tax/income/deductions/itemized/disallowed_interest_components.yaml

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+description: Iowa excludes these federal interest components from its itemized deductions.
+values:
+  1900-01-01: []
+  2018-01-01:
+    - deductible_mortgage_insurance_premiums
+  2020-01-01: []
+metadata:
+  unit: list
+  period: year
+  label: Iowa disallowed federal interest components
+  reference:
+    - title: Iowa DOR Nonconformity, Taxpayer Certainty and Disaster Tax Relief Act of 2019, section 102
+      href: https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/iowa-nonconformity-taxpayer-certainty-and-disaster-tax-relief-act-2019

policyengine_us/parameters/gov/states/ky/tax/income/deductions/itemized/principal_residence_interest_only.yaml

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+description: Kentucky limits the qualified residence interest deduction to the principal residence if this is true.
+values:
+  # Before HB 757, KRS 141.019(2) ended at paragraph (i) and had no qualified residence interest limit.
+  2018-01-01: false
+  # HB 757 (2026 Ky. Acts ch. 161) sec. 7, as amended by HB 869 (ch. 198) sec. 48, adds KRS 141.019(2)(j) for taxable years beginning on or after January 1, 2026.
+  2026-01-01: true
+metadata:
+  unit: bool
+  period: year
+  label: Kentucky qualified residence interest limited to the principal residence
+  reference:
+    - title: KRS 141.019(2)(j), net income of taxpayers other than corporations
+      href: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=57914#page=4
+    - title: 2026 Ky. Acts ch. 161 (HB 757), sec. 7, KRS 141.019(2)(j)
+      href: https://apps.legislature.ky.gov/law/acts/26RS/documents/0161.pdf#page=13
+    - title: 2026 Ky. Acts ch. 198 (HB 869), sec. 48, amending HB 757 sec. 7
+      href: https://apps.legislature.ky.gov/law/acts/26RS/documents/0198.pdf#page=74

policyengine_us/parameters/gov/states/mn/tax/income/deductions/itemized/disallowed_interest_components.yaml

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+description: Minnesota excludes these federal interest components from its itemized deductions.
+values:
+  1900-01-01: []
+  # Section 290.0122 expressly excludes premiums from 2019.
+  2019-01-01:
+    - deductible_mortgage_insurance_premiums
+metadata:
+  unit: list
+  period: year
+  label: Minnesota disallowed federal interest components
+  reference:
+    - title: Minnesota Statutes 290.0122, subdivision 5(3)
+      href: https://www.revisor.mn.gov/statutes/cite/290.0122#stat.290.0122.5
+    - title: Minnesota 2019 First Special Session Laws, chapter 6, article 1, section 16
+      href: https://www.revisor.mn.gov/laws/2019/1/Session+Law/Chapter/6/

policyengine_us/parameters/gov/states/nc/tax/income/deductions/itemized/mortgage_insurance_premiums_allowed.yaml

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+description: North Carolina includes deductible qualified mortgage insurance premiums in its mortgage interest and real estate tax deduction if this is true.
+values:
+  1900-01-01: false
+  2026-01-01: true
+metadata:
+  unit: bool
+  period: year
+  label: North Carolina qualified mortgage insurance premiums allowed
+  reference:
+    - title: North Carolina General Statutes 105-153.5(a)(2)b
+      href: https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-153.5.html
+    - title: North Carolina Session Law 2026-31, section 12(a)
+      href: https://www.ncleg.gov/EnactedLegislation/SessionLaws/PDF/2025-2026/SL2026-31.pdf#page=42
+    - title: 2021 Form D-401, Form D-400 Schedule A line 1
+      href: https://www.ncdor.gov/2021-d-401-individual-income-tax-instructions/open#page=20

policyengine_us/parameters/gov/states/ny/tax/income/deductions/itemized/disallowed_interest_components.yaml

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+description: >-
+  New York excludes these federal interest components from its itemized deduction.
+  The 2026 premium exclusion is an inference from New York's pre-TCJA computation
+  and P.L. 119-21 section 70108 placing the restoration in IRC 163(h)(3)(F).
+  New York has not yet published 2026 forms.
+values:
+  1900-01-01: []
+  2021-01-01:
+    - deductible_mortgage_insurance_premiums
+metadata:
+  unit: list
+  period: year
+  label: New York disallowed federal interest components
+  reference:
+    - title: 2021 Instructions for Form IT-196, Interest you paid
+      href: https://www.tax.ny.gov/pdf/2021/inc/it196i_2021.pdf#page=2
+    - title: New York 2020 forms corrections, 2018 and 2019 IT-196 mortgage insurance deductions
+      href: https://www.tax.ny.gov/forms/updates/forms_updates_2020.htm
+    - title: New York Tax Law 615(a), pre-TCJA itemized deduction computation
+      href: https://www.nysenate.gov/legislation/laws/TAX/615
+    - title: P.L. 119-21, section 70108, mortgage insurance premium restoration
+      href: https://www.govinfo.gov/content/pkg/PLAW-119publ21/pdf/PLAW-119publ21.pdf#page=93