Thanks xmasbaby0! I spent sometime playing with TurboTax and found something very interesting. I removed the existing mortgage interest and entered a new one with amount of $100, the Fed tax due number did not change at all! The CA tax due however immediate went down for $9 (which matches my CA tax bracket). Then I kept raising the mortgage interest amount to $200,$300....$1000..... The Fed tax due did not go down until the mortgage interest reaches around $6,000. It turns out the first $6,000 of my mortgage interest is not deductible. This is true on both 2018 and 2019 return. Once it passes $6000, say if I enter $7000($1000 above the threshold), I will have a Fed tax reduction of $320 which matches perfectly to my Fed tax bracket of 32%.
For 2017 and earlier(before the tax reform), there is no "threshold", the moment I enter the first $100 of mortgage interest, the Fed tax due will go down at the rate of my Fed tax bracket.
So 2017 and before, the mortgage interest is a dollar for dollar deduction for me. After tax reform, only the portion above the threshold(about $6000) is a dollar for dollar deduction. What puzzles me is that I can not find any IRS publications explains why it works like this or how the threshold is calculated. TurboTax also do not provide any worksheet shows how is it calculated. Can you point me to the right direction? Thanks in advance!
