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President Trump’s “One Big Beautiful Bill Act” was passed by the U.S. House of Representatives on Thursday morning, a legislative package that the National Association of Realtors said “included several major victories” for its members.
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The sweeping bill included a series of tax cuts, border control measures, increased work requirements on Medicaid (which are expected to lead to millions of low-income individuals losing health insurance), rolled back green energy tax incentives and raised the debt limit by $4 trillion, among other measures. It was passed by a vote of 215-214.
The bill now heads to the Senate for consideration, where lawmakers are expected to weigh in on it after the Memorial Day holiday.
Two Republicans and all 212 House Democrats voted against the bill, which House Minority Leader Hakeem Jeffries called a “GOP Tax Scam” that represents “an assault on the economy, an assault on healthcare, an assault on nutritional assistance, an assault on tax fairness and an assault on fiscal responsibility.
Some Republicans who initially opposed the bill were concerned that it would add to the federal debt, and called for bigger spending reductions — on top of cuts to Medicaid and food stamp programs included in the version of the bill passed by the House on Thursday.
Democrats approached that issue from the other end, opposing the bill’s proposal to extend $4.5 trillion in tax breaks enacted in 2017.
The most recent analysis of the bill by the Congressional Budget Office, published May 20, estimated those tax cuts would increase the federal deficit by $3.8 trillion over the next decade, while cuts to services would produce $1 trillion in savings.
Moody’s Ratings on Monday became the last credit agency to strip the U.S. of its most favorable debt rating over concerns that Congress and “successive U.S. administrations” have failed to tackle annual budget deficits — an action that could lead to higher interest rates on government bonds and mortgages.
Real estate industry players responded positively to the bill’s passage in the House, in large part because it included several business-friendly measures and sought to provide tax relief for families and low-income households.
“We appreciate House leaders for taking this important step with this tax reform bill, which supports hardworking families and strengthens the real estate economy,” NAR Executive Vice President and Chief Advocacy Officer Shannon McGahn said in a statement. “With lower tax rates, SALT relief, and new incentives for small businesses and community development, this proposal brings real benefits to everyday Americans.”
Emily Cadik, CEO of the Affordable Housing Tax Credit Coalition also praised the bill in a statement.
“The housing credit provisions in the reconciliation legislation passed by the House of Representatives today are a welcome step toward the creation of over half a million additional affordable homes in the U.S. At a time when housing costs remain high, and safe, affordable homes remain out of reach in too many communities across the country, we applaud the House’s action toward resolving a crisis that continues to affect millions of Americans.”
Bob Broeksmit, president and CEO of the Mortgage Bankers Association, also highlighted positive outcomes for the industry through the bill in a statement on Thursday.
“We have worked diligently with Congressional leadership and committee members to preserve key elements of the 2017 Tax Cuts and Jobs Act. This includes the deduction for qualified residence interest, the up to $500,000 homeowner exclusion on the gain on the sale of a principle residence, Section 1031 like-kind exchanges, and the continued deductibility of business interest for real estate. We also support the bill’s expanded deduction for Qualified Business Income under a permanent Section 199A, needed improvements to the Low-Income Housing Tax Credit program, and a new round of Opportunity Zones.”
NAR’s advocacy team was pleased the bill addressed the association’s top five tax priorities: qualified business income deduction, State and Local Tax Deduction (SALT), individual tax rates, mortgage interest deduction, and business SALT and 1031 “like-kind” exchanges.
What follows are highlights of the bill, and if passed in the Senate and signed into law, how it may impact the real estate industry.
An increase in qualified business income deductions (Section 199A)
The new bill would make permanent the deduction for qualified business income, and raises it after December 31, 2025, from 20 percent to 23 percent. Since more than 90 percent of NAR members are classified as independent contractors or small business owners, they would benefit from the increased deduction.
Raising state and local tax (SALT) deduction caps
The bill would raise the SALT deduction cap from $10,000 to $40,000 for households that earn less than $500,000. The marriage penalty would remain in place, meaning that whether filing as single or married, taxpayers would be able to deduct a maximum of $40,000 in state and local taxes. The income cap and deduction would each grow by 1 percent every year over a 10-year span.
Individual tax rates extension
Increased individual alternative minimum tax exemption rates that were set to expire at the end of this year would be permanently extended under the new bill and indexed for inflation, which could aid taxpayers with homebuyer affordability.
Preserving mortgage interest rate deduction
The bill would make permanent the current mortgage interest deduction level to the first $750,000 in home mortgage acquisition debt, what NAR calls “a key tax benefit for homeowners” that “support[s] housing market stability.”
Business SALT and Section 1031 like-kind exchanges
The bill would preserve Section 1031 “like-kind” exchanges, which allows the deferral of capital gains taxes when an investor directs a property’s sale proceeds into a new investment. It would not change anything for most businesses that deduct state and local taxes. Some limits introduced for state-level business SALT workarounds for high-income professionals will likely not impact real estate professionals, NAR noted.
Child tax credits
The new bill provision would eliminate the current expiration date of Dec. 31, 2025, for the double rate, or $2,000, per child tax credit, and make that tax credit permanent, rather than returning to pre-2017 levels of $1,000 per child. The provision also raises the child tax credit to $2,500 per child for tax years 2025 through 2028 and indexes it for inflation starting in 2029. The move would help families and potentially offset some of their housing costs.
Low-income housing tax credits
To support the development of affordable housing, the bill would restore the current 9 percent Low-Income Housing Tax Credit (LIHTC) to its 2021 level with an allocation increase of 12.5 percent. On the 4 percent LIHTC, the bill would lower the bond-financing threshold to 25 percent for projects that are financed by bonds that are issued before 2030. The bill would also designate tribal and rural areas as “Difficult Development Areas.”
Estate and gift tax threshold
The new bill would permanently extend the estate and lifetime gift tax exemption, which was set to expire at the end of the year, and raise it to $15 million for single filers and $30 million for those married filing jointly. NAR said that the provision would prevent a significant drop in the exemption rate and support generational wealth transfers.
The ‘Big 3’ business tax provisions
The bill would allow taxpayers to immediately expense 100 percent of any qualified property used in a trade or business for properties acquired between Jan. 20, 2025, and Jan. 1, 2030, instead of just 40 percent of the cost, according to existing law. It would also allow for the immediate expensing of properties used for manufacturing, refining, agriculture and other similar industries.
Similarly, taxpayers who previously had to deduct research and development over a five-year period would now be able to expense domestic research immediately.
The bill would also raise the cap on business interest expense deductibles for taxable years 2025 through 2029, with “adjusted taxable income” calculated without taking into account deductions for depreciation, amortization or depletion, which is more favorable to businesses.
Opportunity zones
The current designated opportunity zones (OZs) in the U.S., or areas of low-income that are eligible for qualified investments in exchange for tax benefits, are set to expire at the end of 2026. The provision on OZs in the new bill would launch a new round of OZs from 2027 to 2033, narrow the definition of OZs to census areas with a poverty rate of at least 20 percent or a median family income that does not exceed 70 percent of the area’s median income and require at least 33 percent of OZs be rural. Rural investments would also get enhanced tax benefits, like a 30 percent step-up in basis of 10 percent when investments are held for at least five years.
Ending new energy-efficient home credits
Currently, contractors can claim credits on homes built that meet Energy Star standards, with those that are considered Zero Energy Ready eligible for a $5,000 credit and those at low energy efficiency levels eligible for smaller credits. The program was set to expire at the end of 2032, but the new bill would accelerate that expiration date to the end of 2025.
Those homes that started construction before May 12, 2025, and are acquired by the end of 2026 would still qualify for the credit. However, on future projects, contractors would not receive credits for building energy-efficient homes.
