Tax rates are applied to taxable income, not to adjusted gross income (AGI). Taxable income is arrived at by subtracting your personal exemptions and the standard deduction or itemized deductions from AGI. The taxable income limits for the 25% tax rate depend on your filing status.
Debt secured by a principal residence or second home to the extent of the excess of fair market value over acquisition debt. An interest deduction is generally allowed for home equity debt up to $100,000 ($50,000 if married filing separately).