Politics & Money

Bipartisan pair reintroduce bill to make MIP deduction permanent

The proposal would increase the income cap and make the MIP reduction permanent

A bipartisan pair of members from the U.S. House of Representatives last week reintroduced a bill that seeks to solidify the mortgage insurance premium (MIP) deduction. The bill, House Resolution (HR) 1384, is sponsored by Rep. Vern Buchanan (R-Fla.) and co-sponsored by Rep. Jimmy Panetta (D-Calif.), and if passed, it would amend the Internal Revenue Code of 1986 to increase the income gap and make the MIP deduction permanent.

This is not the first time that lawmakers have tried to solidify the MIP deduction. Bipartisan coalitions of representatives have attempted to make the deduction permanent on numerous occasions.

The deduction was first introduced in 2006 with the Tax Relief and Health Care Act, which was signed into law by President George W. Bush. The deduction was later renewed in 2015 when President Barack Obama signed the Protecting Americans from Tax Hikes (PATH) Act.

The deduction was extended yet again in February 2018 with the passage of the Bipartisan Budget Act of 2018. The Further Consolidated Appropriations Act of 2020 retroactively expanded the deduction for tax years 2018 and 2019 and allowed it for tax year 2020.

The Consolidated Appropriations Act then extended the deduction a final time for the 2021 tax year.

Since that time, legislative efforts to extend or make permanent the deduction have not been successful. In January 2019, House Democrats tried to permanently extend the deduction via the Mortgage Insurance Tax Deduction Act of 2019, but the bill failed to progress following its introduction.

Congressional Democrats tried again in 2021 with a similar bill, but it once again failed to progress. That same year, a bipartisan coalition of 20 members — 11 Republicans and nine Democrats — introduced the Middle Class Mortgage Insurance Premium Act of 2021, which would have also increased the income threshold for the phaseout of the tax deduction for 2021.

The deduction would have been accomplished by amending the Internal Revenue Code, but the bill stalled once again.

Reps. Buchanan and Panetta were two of the co-sponsors of the previous bill, and are now making another attempt to get this latest version — HR 1384 — across the finish line. It has been referred to the House Ways and Means Committee.

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