Senate Passes Tax Bill With Many Wins for NAHB Members

The Senate today passed the One Big Beautiful Bill Act (H.R. 1) — sweeping tax and domestic policy legislation that includes several important housing and business provisions that will benefit small businesses, real estate and our members. Most notably, NAHB was able to secure key wins regarding state and local tax deductions for individuals and pass-through businesses.

The House is expected to vote on the Senate bill this week to meet President Trump’s goal of sending him the landmark legislation by July 4.

Prior to the Senate vote, NAHB sent a letter to Senate Majority Leader John Thune (R-S.D.) and Minority Leader Chuck Schumer (D-N.Y.) designating support of H.R. 1 as a “key vote” because of its importance to the housing industry.

NAHB secured several key victories in the Senate-passed tax bill:

Individual Provisions

• The Tax Cuts and Jobs Act will be made permanent, including the tax rate structure and increased exemptions for the Alternative Minimum Tax. This blocks a $4 trillion tax increase set to take effect next year.
• The estate tax exemption will increase to $15 million, made permanent and be indexed for inflation.
• Current mortgage interest deduction rules will be made permanent and mortgage insurance premiums will now be allowed to be deducted.
• The Pease limitation on itemized deductions will be permanently repealed. In its place is a new limitation that reduces the value of itemized deductions for taxpayers in the top bracket from 37 cents to 35 cents, but excludes 199A deductions for this limitation.

Business Provisions

• The Section 199A Qualified Business Income Deduction, which helps provide tax parity for pass-through entities, will be made permanent at 20%.
• The Low-Income Housing Tax Credit will be expanded. The Senate bill will permanently increase 9% credit allocations by 12% and permanently reduce the bond test for 4% credit deals to 25%, which will expand resources in bond-constrained states. The Senate bill also drops the temporary rural basis boost included by the House.
• 100% bonus depreciation will be restored and made permanent.
• Section 179 business expensing limits will be increased for small businesses.
• Opportunity Zones will be made permanent.
• The 1099 reporting threshold will be increased permanently to $2,000 and indexed for inflation starting for 2025.
• The Section 460(e) partial completed method exemption for homes ensures that single-family homes are not taxed until they are completed and sold. The Senate bill would allow condos to also qualify for this tax treatment, which is what NAHB advocated for.

State and Local Tax Deduction for Individuals and Pass-Through Businesses

The House-passed bill would have permanently increased the controversial limit on the state and local tax (SALT) deduction for individuals from the current $10,000 cap to $40,000. NAHB supported the House position on SALT, which was one of the final elements negotiated in the House bill that ensured its passage.

The Senate viewed the House proposal on SALT with skepticism, but also recognized the careful political balance needed to pass the bill in the House. Several senators sought to unwind the House SALT deal, which threatened the viability of the entire bill, leading to high-level negotiations between the House, Senate and Treasury Secretary Scott Bessent.

The Senate ultimately agreed to follow the House and increase the SALT cap to $40,000, but only on a temporary basis. The increase would take effect for 2025 and remain in force through 2029, with a 1% inflation adjustment after 2025. As with the House-passed bill, the Senate bill phases down the cap increase for households with incomes above $500,000, but not below a $10,000 cap. The SALT cap would revert back to $10,000 in 2030, which means debate over limiting SALT deductions will continue in the coming years. 

In a major victory for our members, the Senate removed a limitation to the amount of state income taxes a pass-through business can deduct. This means that none of our members faces a business SALT tax increase.

Energy Tax Credits

NAHB’s only concern with H.R. 1 is the early termination of the energy tax credits, particularly the Section 45L New Energy Efficient Home Credit, the Section 25D Residential Clean Energy Credit, and the Section 48E Clean Electricity Investment Credit.

The Section 45L credit will be eliminated after June 30, 2026, and the Section 25D credit will expire at the end of 2025. The Section 48E credit will be eliminated for eligible property that is not placed in service by Dec. 31, 2027. However, on a positive note, the Senate heeded NAHB’s recommendation to allow solar leasing arrangements to continue to benefit from the 48E tax credit. These arrangements eliminate the upfront costs of installing a solar system on a home and allow home owners to benefit from reduced utility costs. 

NAHB believes the most effective way to promote energy efficiency is through voluntary tax incentives. Moreover, NAHB remains concerned because H.R. 1 lacks sufficient transition time for home builders, home owners and remodelers who use these tax credits.  

Over their history, these energy tax credits have been subject to starts and stops as Congress has allowed them to expire. This history suggests that this is not the final word on these tax credits, and NAHB will look for future opportunities to revive them. 

Finally, the bill also includes provisions regarding two NAHB key priorities to increase domestic timber production as well as provide additional resources for workforce development.