I remember when I was able to deduct all interest payments from my income before calculating my tax liability: credit card interest, consumer loan interest, personal loan, student loan, as well as mortgage interest. Ah -- those were the good old days! Then only home mortgage interest was deductible -- I'm guessing but I think this change was in the early 80s. After which, I remember home equity loans became a big deal not only because the suburban real estate market had done very well in many areas so people had tens of thousands of dollars in equity not necessarily because they had paid off large amounts of the mortgage but because their house's market value had risen 10 -20% per year for a stretch of years, but because interest payments on home equity loans were still tax deductible under the home mortgage deduction rule -- a home equity loan being no more than a second mortgage. My Wash Post today says that the new tax bill will allow deductions for interest payments on student loans up to a maximum of $2500 per year. Which would be the first interest deduction to reappear along side the mortgage interest deduction as far as I know. All deductions are simply subsidies -- which can be good or bad on equity, efficiency, environmental, or cultural grounds.
