Provisions in Proposed "One, Big, Beautiful Bill" May Impact Real Estate

The United States House Committee on Ways & Means recently introduced “The One, Big, Beautiful Bill.” This proposal includes several key provisions that could significantly impact the real estate industry. Although the proposal primarily focuses on extending current policies, it has not yet become law.

Key provisions of the proposed bill

• Extension of the Tax Cuts and Jobs Act of 2017. Income tax rates and brackets (indexed for inflation) for individuals, estates, and trusts would be extended.
• There is no proposed change to the corporate tax rate.
• Increase in the Qualified Business Income (QBI) deduction. The deduction would increase from 20% to 23%, effective for tax years beginning after December 31, 2025.
• Extension of 100% bonus depreciation. This would apply to qualified property acquired and placed in service after January 19, 2025. There would also be a special bonus depreciation allowance for nonresidential real property that is "qualified production property."
• Increased dollar limitations for expensing certain depreciable business assets. The maximum amount a taxpayer could expense under IRC Section 179 would increase to $2.5 million, reduced by the amount by which the cost of qualifying property exceeds $4 million. These amounts would be adjusted for inflation for taxable years beginning after 2025.
• There are no proposed changes to carried interest.
• Reinstatement of the depreciation and amortization addback for business interest expense. This applies when computing the Section 163(j) business interest limitation for tax years beginning after December 31, 2024.
• Extension of the qualified opportunity zone program. A second round of the program would launch from 2027 to 2033 with key enhancements, including a narrower definition of low-income communities, a requirement that at least 33% of opportunity zones be rural, simplified investment incentives, and new reporting requirements. Rural investments via "Rural Qualified Opportunity Funds" will receive enhanced tax benefits, including a 30% step-up in basis after five years.
• Increase in the individual state and local tax (SALT) cap. The cap would increase to $30,000 with phaseouts starting at $400,000 of modified adjusted gross income.
• Increase in the lifetime estate and gift tax exemption. The exemption would increase to $15 million, indexed for inflation, effective for tax years beginning after December 31, 2025.
• Modifications to the tax credit framework under the Inflation Reduction Act.
• Extension of full expensing of domestic research and development (R&D) expenditures. This would apply to tax years beginning after December 31, 2024. Previously capitalized costs would continue to be amortized.
• Permanent limitation on excess business losses of noncorporate taxpayers. This provision makes the limitation on excess business losses by noncorporate taxpayers permanent. Excess business losses disallowed in taxable years beginning after December 31, 2024, are taken into account in determining a taxpayer’s excess business losses in subsequent taxable years.
• Modifications to the low-income housing credit. This provision makes three changes to the LIHTC program. First, for 2026-2029, the “9% LIHTC” is restored to its 2021 level with a 12.5% allocation increase. Second, for the “4% LIHTC”, this provision lowers the bond-financing threshold to 25% for projects financed by bonds with an issue date after 2025 but before 2030. Last, this provision designates Tribal and rural areas as DDAs.

We are still early in the process, and the proposal is likely to undergo several changes before a final bill is supported by the President, House of Representatives, and Senate. Many Washington, DC pundits are expecting a final bill in July or August.

How to prepare for proposed tax legislation

To help you stay ahead of potential changes, consider taking the following steps:

• Remain calm. The proposed legislation is still in its early stages and may undergo substantial revisions as it moves through the Senate.
• Stay informed and engaged. Our Tax Policy Watch page offers timely updates and deeper insights into the House proposal, helping you understand how evolving provisions may affect your business and personal finances. Subscribe to this blog, in addition to our tax policy newsletter, to receive ongoing updates and practical guidance as the legislative landscape develops.