House Passes Tax Bill with Big Wins for Real Estate

Early this morning, May 22, the House of Representatives passed the One Big Beautiful Bill Act, which includes several important tax changes that benefit the real estate industry. These changes reflect long-time priorities of the National Association of REALTORS® (NAR), which has worked hard to promote tax policies that support homeownership and the housing market.

The bill includes several of NAR’s top goals. It boosts the small business tax deduction, strengthens the state and local tax (SALT) deduction, and continues protections for the mortgage interest deduction. It also makes the current lower tax rates for individuals permanent and increases the child tax credit, which could help more families afford to buy homes.

Beyond those priorities, the bill also includes other provisions NAR supports. These include improvements to the Low-Income Housing Tax Credit, clearer rules for the estate tax, renewed tax benefits for investments in underserved areas (Opportunity Zones), and the creation of special investment accounts for children that can be used for major expenses such as buying a first home. All of these measures aim to make housing more affordable, encourage investment, and help families build long-term financial security.

“We appreciate House leaders for taking this important step with a bill that supports hardworking families and strengthens the real estate economy. With lower tax rates, SALT relief, and new incentives for small businesses and community development, this proposal brings real benefits to everyday Americans,” says Shannon McGahn, NAR executive vice president and chief advocacy officer.

“While significant changes are possible as this bill moves to the Senate, NAR will stay closely engaged with lawmakers to ensure real estate remains a central focus,” McGahn says. “We are committed to advocating for provisions that expand opportunity, support homeownership, strengthen communities nationwide, and put the American Dream within reach for more families.”

A recent national survey funded by NAR found that Americans strongly support keeping key parts of the 2017 Tax Cuts and Jobs Act that affect real estate and homeownership. The survey showed that 76% of voters are aware of efforts to extend the law. Among those who know about it, 86% support keeping lower income tax rates for individuals and married couples, 83% back a 20% deduction for independent contractors and small businesses earning under $400,000, and 80% support tax breaks that encourage investment in underserved communities. The survey included 1,000 registered voters and was carried out by Public Opinion Strategies and Hart Research from April 3 to 6, 2025. It has a margin of error of 3.10%.

Below is a summary of the provisions included in the current bill:

Top Five NAR Tax Priorities

1. Qualified Business Income Deduction (Section 199A)
   • The bill permanently increases the QBI deduction from 20% to 23%.
   • This deduction benefits more than 90% of NAR members, who are classified as independent contractors or small business owners.
   • 83% of voters said they supported the 20% tax deduction for independent contractors and small businesses making less than $400,000 a year, according to NAR’s national poll.
2. State and Local Tax Deduction (SALT)
   • The SALT deduction cap is quadrupled from $10,000 to $40,000 for households earning under $500,000. However, the bill does not eliminate the marriage penalty. Thus, whether taxpayers are single filers or married couples filing a joint return, they can deduct a maximum of $40,000 in state and local taxes. The income cap and deduction both grow 1% every year over a 10-year window.
3. Individual Tax Rates
   • Current individual tax rates, lowered as part of the TCJA, are made permanent and indexed for inflation, aiding taxpayers and improving affordability for prospective homebuyers.
   • 86% of voters support the lowered income tax rates for individuals and married couples, according to NAR’s national poll.
4. Mortgage Interest Deduction (MID)
   • The draft preserves and makes permanent the MID at its current level, maintaining a key tax benefit for homeowners and supporting housing market stability.
   • There had been concern MID might be reduced or eliminated as a budget offset
   • 91% of voters support maintaining tax incentives such as the mortgage interest deduction for homeowners, according to the NAR poll.
5. Business SALT and 1031 Like-Kind Exchanges
   • The draft bill protects Section 1031 like-kind exchanges, which are often erroneously regarded as a tax loophole.
   • It also includes no changes for most businesses deducting state and local taxes (sometimes referred to as “Business SALT”).
   • While the bill does provide limits in state-level business SALT workarounds for certain high-income professionals (e.g., law firms, hedge funds, consulting businesses, and other services), the provisions do not appear to impact real estate professionals.

Additional Positive Tax Provisions for Real Estate Economy

• Low-Income Housing Tax Credit (LIHTC)
  • Key provisions from the LIHTC Improvement Act will be included to support affordable housing development.
• Child Tax Credit Increased to $2,500 (2025–2028)
  • Temporarily raises the child tax credit through 2028 and then indexes it for inflation starting in 2029.
  • The child tax credit supports families and could help with housing affordability.
• Creation of Tax-Advantaged Child Investment Accounts
  • Can be used for qualified expenses of the beneficiary such as first-time home purchases.
• Permanent Estate and Gift Tax Threshold Set at $15 Million (Inflation-Adjusted)
  • Prevents a significant drop in exemption levels and supports generational wealth transfer, aligning with NAR priorities.
• No Top Tax-Rate Increase
  • The proposed 39.6% top rate was removed from the bill.
• Restoration of “Big 3” Business Tax Provisions
  • Full expensing of research and development (R&D)
  • Bonus depreciation
  • Fixes to interest expense deduction limits
• Immediate Expensing for Certain Industrial Structures
  • Applies to structures used in manufacturing, refining, agriculture and related industries.
• No Change to Carried Interest Treatment
• Opportunity Zones
  • Renewed with revised incentives to encourage targeted investment, including in rural areas.
  • 80% of voters expressed support for tax incentives for investors to encourage economic growth and development in underserved and poorer communities, according to NAR’s recent national poll.