On June 25, 2025, the U.S. Senate passed a sweeping tax reform legislation that includes important provisions for the real estate sector, advancing the measure closer to final approval. This legislation, referred to as the “One Big Beautiful Bill,” had previously been passed by the U.S. House of Representatives on May 22. The Senate-amended version is expected to be approved by the House shortly, leading to its presentation to the president for signature.
The National Association of REALTORS® (NAR) played a crucial role in advocating for the bill, securing several key provisions that aim to bolster homeownership and support the overall real estate economy. NAR Executive Vice President and Chief Advocacy Officer, Shannon McGahn, emphasized the importance of ongoing dialogue with lawmakers, stating that the organization conducted extensive research and polling to demonstrate the value of the bill’s real estate provisions.
Among the notable achievements for NAR in this tax reform bill are five primary priorities:
- Permanent Extension of Lower Individual Tax Rates : This provision ensures that the current lower tax rates for individuals will remain in effect.
- Enhanced Qualified Business Income Deduction (Section 199A) : This deduction benefits many real estate professionals and small business owners, allowing for a reduction in taxable income.
- Temporary Quadrupling of the State and Local Tax (SALT) Deduction Cap : Beginning in 2025, the SALT deduction cap will be increased for five years, providing significant tax relief to homeowners who pay state and local taxes.
- Protection for Business SALT Deductions and 1031 Like-Kind Exchanges : This provision preserves the ability for investors to defer capital gains taxes on property sales, which is vital for maintaining liquidity in the real estate market.
- Permanent Extension of the Mortgage Interest Deduction : This longstanding deduction continues to support homeowners by allowing them to deduct mortgage interest from their taxable income.
McGahn highlighted the significance of these provisions, stating, “These provisions form the backbone of the real estate economy—from supporting first-time and first-generation buyers to strengthening investment in housing supply and protecting existing homeowners.”
In addition to these key wins, several other provisions in the bill are expected to positively impact the real estate sector, including:
- Low-Income Housing Tax Credit (LIHTC) : Provisions from the LIHTC Improvement Act will be included permanently to encourage affordable housing development.
- Increased Child Tax Credit : The child tax credit will be raised to $2,200, which could alleviate housing affordability challenges for families.
- Permanent Estate and Gift Tax Threshold : The threshold is set at $15 million (inflation-adjusted), aiding in generational wealth transfer.
- No Increase to the Top Individual Tax Rate : The proposed increase to 39.6% was removed, maintaining lower tax rates for high earners.
- Strengthened Opportunity Zones : Renewed incentives for investment in economically underserved communities were included, reflecting support for targeted economic development.
The NAR has also emphasized the importance of public support in shaping the final legislation. Recent polling conducted by NAR indicated substantial public backing for many of the tax provisions, including:
- 92% support for tax-free savings accounts for first-time home buyers.
- 91% in favor of preserving the mortgage interest deduction.
- 86% support for maintaining lower-income tax rates.
The bill also introduces a provision for “baby bonds,” which would establish a one-time $1,000 government investment for each child born after the bill’s enactment. This initiative aims to help new generations save for their first home.
As the House prepares to vote on the Senate’s amendments, the success of this tax reform bill could have lasting implications for the real estate market, influencing homeownership rates, affordability, and investment strategies across the nation. Stakeholders in the real estate sector will be closely monitoring the final steps of this legislative process.