Last updated on July 24th, 2025
On July 4, the president signed into law the One Big Beautiful Bill Act (OBBBA), implementing many significant tax and spending policy changes. Below are some of the key provisions of the legislation impacting the real estate industry.
Permanent Extension of TCJA Tax Rates
The OBBBA makes permanent the tax rates and brackets established by the Tax Cuts and Jobs Act (TCJA) of 2017.
Increased SALT Cap
The OBBBA temporarily increases the federal deduction limit for state and local taxes (SALT cap) from $10,000 to $40,000. The limit will be adjusted each year for inflation until 2029. In 2030, the SALT cap will revert to $10,000. The deduction phases out for taxpayers with modified gross income (MAGI) greater than $500,000 in 2025, with the MAGI threshold adjusted for inflation until 2029. For high-income earners before 2030, the SALT deduction is reduced by 30% of their MAGI over the threshold amount, but the deduction will not be reduced below $10,000. The OBBBA places no limitations on Pass-Through Entity Taxes (PTET), which are workarounds for SALT.
Bonus Depreciation
The OBBBA makes permanent 100% bonus depreciation for qualified property placed in service as of January 19, 2025.
Increased Section 179 Deduction
The OBBBA increases the Section 179 expensing limit to $2.5 million. The limit is reduced by the amount by which the cost of qualifying property exceeds $4 million (new phasedown threshold).
QBI Deduction
The OBBBA makes the 20% qualified business income deduction (Sec. 199A) permanent. The minimum deduction for active QBI is $400. To claim the deduction, applicable taxpayers must have a minimum of $1000 QBI from one or more qualified trades or businesses in which they materially participate. The phase-in threshold has been increased to $75,000 (from $50,000) for single filers and $150,000 (from $100,000) for joint filers.
Mortgage Interest Deduction
The OBBBA permanently lowers the deduction limitation for qualified residence interest to the first $750,000 in home mortgage acquisition debt.
Limitation on Business Interest
The OBBBA reinstates the EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) limitation under Sec. 163(j), effective for tax years beginning after December 31, 2024. Adjusted taxable income (ATI) will be computed without regard to the deduction for depreciation, amortization, or depletion.
Expansion of Low-Income Housing Tax Credit (LIHTC)
The OBBBA permanently increases allocations for 9% LIHTC by 12%, and also permanently reduces the private activity bond financing requirement for 4% LIHTC from 50% to 25%. These changes will become effective January 1, 2026.
Qualified Opportunity Zones
The OBBBA makes the Opportunity Zones tax incentive permanent, with several modifications including a narrower definition of “low-income community” and expanded reporting requirements. Every ten years, state governors will propose new opportunity zones. The OBBBA also includes additional incentives for rural opportunity zones. This provision becomes effective January 1, 2027.
Percentage-of-Completion Method
The OBBBA expands the exception to the percentage-of-completion method requirement to certain residential construction contracts.
New Markets Tax Credit (NMTC)
The OBBBA makes the Sec. 45D New Markets Tax Credit permanent.
Removal of Clean Energy Incentives
The OBBBA terminates or phases out many clean energy tax incentives, including Section 179D (energy-efficient commercial buildings deduction), Section 45L (new energy-efficient home credit), Section 48E (clean electricity investment credit), and Section 45Y (clean electricity production tax credit).
Additional Guidance
The above provisions represent just some of the recent tax and policy changes that may impact you and your business. To learn about additional relevant provisions—and for insights and guidance on how these changes could affect you—please don’t hesitate to reach out to our real estate accounting professionals at RBT CPAs. Our team is here to support all of your tax, audit, accounting, and advisory needs. Give us a call today to find out how we can be Remarkably Better Together.