Compared to prior tax law, the TCJA decreased the mortgage interest deduction limitation by what amount?

The Tax Cuts and Jobs Act (TCJA) made significant changes to the mortgage interest deduction, specifically the limits on the amount of mortgage interest that taxpayers could deduct. Under prior law, taxpayers could deduct interest on mortgage debt up to $1 million for primary and secondary residences. The TCJA lowered this limit to $750,000 for new mortgages, thereby decreasing the amount of mortgage debt on which interest can be deducted by $250,000.

This adjustment reflects a broader effort within the TCJA to simplify the tax code and generate additional revenue while also addressing the housing market. By reducing the deduction limit, the TCJA aimed to balance the benefits of the mortgage interest deduction with the need for tax reform and fiscal responsibility. The correct answer specifically acknowledges this reduction, making it clear that, in total, the limit on mortgage interest deduction was decreased by $250,000 from the previous threshold.