On July 4th, President Trump signed into law the One Big Beautiful Bill Act, a budget reconciliation package that includes a wide-ranging tax reform plan.
Among the most closely watched provisions is a revision to the State and Local Tax (SALT) deduction cap. Working with California Representative Young Kim and NAR, C.A.R. helped secure language in the House bill that would have permanently increased the SALT cap to $40,000 for households with incomes below $500,000. The final bill passed by Congress will increase the SALT cap to $40,000 for individuals and married couples with incomes below $500,000 but expires after a five-year period. Following that, the cap reverts back to the current $10,000 limit.
The bill includes provisions that will support commercial real estate and affordable rental housing, such as an extension of the Opportunity Zones program and enhancements to the Low-Income Housing Tax Credit (LIHTC). These measures aim to boost investment in underserved communities and increase the availability of affordable rental housing — central components of a balanced housing strategy.
While the bill features the commercial real estate tax provisions above, it fell short in addressing several long-standing REALTOR®-supported homeownership priorities. REALTOR®-advocated policies, such as increasing the capital gains exclusion on the sale of a primary residence and federal incentives to convert underused commercial properties into residential housing — both seen as critical tools to expand homeownership and housing supply — were not included. The package also codifies the current lower mortgage interest deduction limit of $750,000 — which had been set to increase back to $1 million at the end of the year — in perpetuity.
Lastly, the bill makes permanent the 20% pass-through for 199a filers.
SOURCE: California Association of REALTORS®
