{
  "id": "rental-income-tax",
  "version": "885c7836b94c",
  "status": "published",
  "name": "Rental Income Tax Calculator",
  "question": "How much is my rental income tax?",
  "summary": "Estimates the 2026 federal tax on rental property income: rent less expenses and 27.5-year depreciation, the $25,000 passive loss allowance, and the tax at your rates from the site’s tax engine.",
  "category": "finance",
  "subcategory": "tax-and-pay",
  "url": "https://www.acalculator.org/finance/rental-income-tax-calculator",
  "markdown": "https://www.acalculator.org/finance/rental-income-tax-calculator.md",
  "kind": "function",
  "method": "Net = rent − mortgage interest − property taxes − other expenses − building cost × the 2026 depreciation percent. A loss is deductible up to $25,000 − 50% × (modified AGI − $100,000), not below $0; the rest carries over. Tax = 2026 Form 1040 tax with the rental income or allowed loss − without it.",
  "assumptions": [
    "Tax year 2026, one residential rental held for rent all year, on Schedule E. Amounts up to $1 trillion.",
    "Other income is ordinary income with the standard deduction and no credits, and is your modified AGI for the allowance.",
    "Depreciation: Table 2-2d, 3.636% a year after the first (from year 10 the table alternates 3.636% and 3.637%). Not a real estate professional; no losses carried from earlier years. An estimate, not tax advice."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "rent": {
        "title": "Rent received in 2026",
        "description": "All rent you received for the year, including advance rent and fees tenants paid.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "mortgage": {
        "title": "Mortgage interest (optional)",
        "description": "Interest on the loan for the rental property.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "taxes": {
        "title": "Property taxes (optional)",
        "description": "Real estate taxes on the rental property.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "costs": {
        "title": "Other expenses (optional)",
        "description": "Insurance, repairs, management fees, HOA dues, utilities, advertising and other rental costs you paid.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "basis": {
        "title": "Building cost, not land (optional)",
        "description": "What you paid for the building (plus improvements), not counting the land, for depreciation.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "start": {
        "title": "Placed in service",
        "description": "When you first had the property ready to rent; it sets the first year of depreciation.",
        "type": "string",
        "enum": [
          "before",
          "1",
          "2",
          "3",
          "4",
          "5",
          "6",
          "7",
          "8",
          "9",
          "10",
          "11",
          "12"
        ]
      },
      "status": {
        "title": "Filing status",
        "description": "Your 2026 federal filing status.",
        "type": "string",
        "enum": [
          "single",
          "mfj",
          "mfs",
          "hoh",
          "qss"
        ]
      },
      "income": {
        "title": "Other income",
        "description": "Your other 2026 income before deductions, such as wages; it sets your tax rate.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "active": {
        "title": "You actively participate",
        "description": "You own at least 10% and make management decisions such as approving tenants; needed to deduct a loss.",
        "type": "boolean"
      },
      "apart": {
        "title": "Lived apart from your spouse all year",
        "description": "Married filing separately can deduct a rental loss only after living apart all year.",
        "type": "boolean"
      }
    }
  },
  "outputs": {
    "tax": {
      "label": "Federal tax on the rental",
      "description": "Federal tax with the rental minus without it; below $0 when a loss saves tax.",
      "format": "money"
    },
    "net": {
      "label": "Net rental income",
      "description": "Rent − mortgage interest − property taxes − other expenses − depreciation; below $0 is a loss.",
      "format": "money"
    },
    "depreciation": {
      "label": "Depreciation",
      "description": "Building cost × the 2026 percent: by the month placed in service, or 3.636% for a full year.",
      "format": "money"
    },
    "onReturn": {
      "label": "Rental income on your return",
      "description": "Net rental income, or minus the part of a loss the allowance lets you deduct.",
      "format": "money"
    },
    "suspended": {
      "label": "Loss carried to 2027",
      "description": "The part of a loss above the allowance; it waits for rental income or a sale.",
      "format": "money"
    },
    "allowance": {
      "label": "Special allowance",
      "description": "Up to $25,000 of rental loss, less 50% of modified AGI over $100,000 ($12,500 and $50,000 apart).",
      "format": "money"
    },
    "rate": {
      "label": "Marginal tax rate",
      "description": "The federal rate on the next dollar of income, with the rental.",
      "format": "percent"
    },
    "niit": {
      "label": "Net investment income tax part",
      "description": "The 3.8% net investment income tax the rental income adds.",
      "format": "money"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "rent": 30000,
      "mortgage": 9000,
      "taxes": 3500,
      "costs": 5500,
      "basis": 220000,
      "start": "before",
      "status": "single",
      "income": 90000,
      "active": true,
      "apart": false
    },
    "outputs": {
      "tax": 880,
      "net": 4000.8,
      "depreciation": 7999.2,
      "onReturn": 4000.8,
      "suspended": 0,
      "allowance": 25000,
      "rate": 22,
      "niit": 0
    },
    "text": "Net rental income of $4,000.80 changes your 2026 federal tax by $880.00."
  },
  "examples": [
    {
      "given": {
        "rent": 30000,
        "mortgage": 9000,
        "taxes": 3500,
        "costs": 5500,
        "basis": 220000,
        "start": "before",
        "status": "single",
        "income": 90000
      },
      "expect": {
        "depreciation": 7999.2,
        "net": 4000.8,
        "onReturn": 4000.8,
        "tax": 880,
        "rate": 22,
        "niit": 0
      },
      "source": "IRS Publication 527 (2025), chapters 2 and 5, https://www.irs.gov/publications/p527 (3.636% a full year); the 2026 Form 1040 tax with the rental − without it (IRS Rev. Proc. 2025-32; Form 8960); hand calculation in content.mdx; Python 3 check in docs/progress/WP-142/xcheck.py"
    },
    {
      "given": {
        "rent": 18000,
        "mortgage": 12000,
        "taxes": 4000,
        "costs": 6000,
        "basis": 275000,
        "start": "before",
        "status": "mfj",
        "income": 120000,
        "active": true
      },
      "expect": {
        "net": -13999,
        "allowance": 15000,
        "onReturn": -13999,
        "suspended": 0,
        "tax": -1680,
        "rate": 12
      },
      "source": "IRS Publication 925 (2025), special $25,000 allowance, https://www.irs.gov/publications/p925; IRS Publication 527 (2025), chapters 2 and 5, https://www.irs.gov/publications/p527; the 2026 Form 1040 tax with the rental − without it (IRS Rev. Proc. 2025-32; Form 8960) (12% bracket); hand calculation in content.mdx; Python 3 check in docs/progress/WP-142/xcheck.py"
    },
    {
      "given": {
        "rent": 18000,
        "mortgage": 12000,
        "taxes": 4000,
        "costs": 6000,
        "basis": 275000,
        "start": "before",
        "status": "single",
        "income": 140000,
        "active": true
      },
      "expect": {
        "allowance": 5000,
        "onReturn": -5000,
        "suspended": 8999,
        "tax": -1200,
        "rate": 24
      },
      "source": "IRS Publication 925 (2025), special $25,000 allowance, https://www.irs.gov/publications/p925 (25,000 − 50% × 40,000 = 5,000); the 2026 Form 1040 tax with the rental − without it (IRS Rev. Proc. 2025-32; Form 8960) (24% bracket); Python 3 check in docs/progress/WP-142/xcheck.py"
    },
    {
      "given": {
        "rent": 24000,
        "mortgage": 0,
        "taxes": 2000,
        "costs": 3000,
        "basis": 165000,
        "start": "4",
        "status": "single",
        "income": 60000
      },
      "expect": {
        "depreciation": 4250.4,
        "net": 14749.6,
        "tax": 2587
      },
      "source": "IRS Publication 527 (2025), chapters 2 and 5, https://www.irs.gov/publications/p527 (Table 2-2d, April: 2.576%); Python 3 check in docs/progress/WP-142/xcheck.py"
    }
  ],
  "sources": [
    "IRS, Publication 527 (2025), Residential Rental Property: rental income and expenses, depreciation over 27.5 years with the straight line method and the mid-month convention (Table 2-2d: for example February 3.182%, May 2.273%, August 1.364% in year 1, and 3.636% in later years), and the special $25,000 allowance for active participation ($12,500 married filing separately and living apart; reduced by 50% of modified AGI over $100,000, $50,000 separately). https://www.irs.gov/publications/p527 (retrieved 2026-10-19)",
    "IRS, Publication 925 (2025), Passive Activity and At-Risk Rules: the special $25,000 allowance and how modified AGI is figured for it. https://www.irs.gov/publications/p925 (retrieved 2026-10-19)",
    "IRS, Topic no. 414, Rental income and expenses (reviewed 24-Sep-2026). https://www.irs.gov/taxtopics/tc414 (retrieved 2026-10-19)",
    "IRS, Rev. Proc. 2025-32 (Internal Revenue Bulletin 2025-45): 2026 rate tables (section 4.01) and standard deduction (section 4.14). https://www.irs.gov/irb/2025-45_IRB (retrieved 2026-10-19)",
    "IRS, Instructions for Form 8960 (2025): 3.8% net investment income tax over $200,000 of modified AGI ($250,000 joint and qualifying surviving spouse, $125,000 married filing separately); rental income is investment income. https://www.irs.gov/instructions/i8960 (retrieved 2026-10-19)",
    "IRS, 2025 Tax Table (Instructions for Form 1040): taxable income under $100,000 is taxed at the middle of its row (rows of $0 to $5, $5 to $15 and $15 to $25, then $25 rows up to $3,000 and $50 rows from $3,000), in whole dollars. https://www.irs.gov/instructions/i1040tt (retrieved 2026-10-19)"
  ],
  "related": [
    "rental-property",
    "rental-property-depreciation",
    "cap-rate",
    "income-tax"
  ],
  "changelog": []
}