BREAKING: House Passes Major Tax Reform with Big Wins for Real Estate and American Families

In a major development early this morning, the U.S. House of Representatives passed the One Big Beautiful Bill Act, a sweeping tax reform package that brings significant benefits to homeowners, real estate professionals, and families across the country.

The National Association of REALTORS® (NAR) played a crucial role in shaping this legislation. Their advocacy efforts helped secure several top priorities that will support homeownership, boost small businesses, and strengthen the real estate economy.

What the Bill Means for Real Estate and Homeownership

This legislation delivers long-sought-after victories for the real estate industry. Among the highlights are an expanded tax deduction for small businesses, a higher cap on state and local tax deductions, and the permanent protection of the mortgage interest deduction. The bill also keeps individual tax rates lower and increases the child tax credit, making it easier for many families to consider homeownership for the first time.

According to Shannon McGahn, NAR’s chief advocacy officer, this is a strong step forward for working families and for the communities they call home. She emphasized that NAR will continue to work closely with lawmakers as the bill moves to the Senate, ensuring real estate remains a central focus of tax policy.

Key Wins for Real Estate

Qualified Business Income Deduction

The deduction for independent contractors and small business owners has been permanently increased from 20 percent to 23 percent. This is especially impactful for real estate agents, with more than 90 percent of NAR members benefiting from this provision.

State and Local Tax Deduction

The SALT deduction cap will rise significantly. Households earning under $500,000 can now deduct up to $40,000 in state and local taxes. While the marriage penalty still applies, this change represents a major increase in allowable deductions, with the cap and income threshold rising annually for the next decade.

Individual Tax Rates

The individual income tax rates introduced under the 2017 Tax Cuts and Jobs Act are now permanent. These lower rates are also tied to inflation, offering long-term relief to taxpayers and helping more people afford home loans.

Mortgage Interest Deduction

One of the biggest wins for homeowners is the preservation of the mortgage interest deduction. Making this benefit permanent ensures that homeowners can continue to deduct interest on their mortgage, helping to reduce their tax burden and encouraging investment in homeownership.

Section 1031 Like-Kind Exchanges and Business SALT

The bill protects like-kind exchanges under Section 1031, a powerful tool often misunderstood but essential for real estate investors. The legislation also preserves most state and local tax deductions for businesses, with no major impact on real estate professionals despite some new limitations on other industries.

Additional Provisions That Strengthen the Housing Market

The bill also includes a range of provisions designed to support long-term housing stability and investment.

  • The Low-Income Housing Tax Credit will be enhanced to increase the availability of affordable housing

  • The child tax credit will rise to $2,500 through 2028, then be adjusted for inflation

  • New tax-advantaged child investment accounts will be available for expenses such as a first-time home purchase

  • The estate and gift tax threshold will be set at $15 million, adjusted for inflation, helping families preserve generational wealth

  • Proposals to raise the top tax rate to 39.6 percent were removed, keeping more income in the hands of taxpayers

  • Opportunity Zones were renewed and updated to encourage investment in underserved and rural communities

  • Key business tax provisions were restored, including full expensing for research and development, bonus depreciation, and immediate expensing for certain industrial properties

According to a national poll commissioned by NAR in April, most Americans support retaining the tax benefits from the 2017 reforms. The survey found that 86 percent back lower income tax rates for individuals and married couples, 83 percent support the 20 percent small business deduction, and 80 percent favor incentives that drive investment in underserved communities.

As the legislation moves to the Senate, NAR will continue advocating to ensure that housing remains at the heart of economic growth. For now, this bill marks a major step toward making the American Dream more accessible for millions.