Working Families Tax Cuts: More Money in Members’ Pockets

July 4 marks the one-year anniversary of the Working Families Tax Cuts, also known as the One Big Beautiful Bill Act — a landmark NAHB-supported law that permanently extended the 2017 tax cuts and delivered major tax relief for working families and small businesses.

The legislation was a major tax package from the 119th Congress, with Republicans backing it as a way to prevent large tax hikes on middle-class families.

“The Working Families Tax Cuts have boosted economic growth and given NAHB members the tax certainty they need to invest in their businesses,” said NAHB Chairman Bill Owens. “Over the past year, this law has helped Americans keep more of their hard-earned money, expanded access to homeownership and delivered a historic increase in resources for building affordable rental housing.”

Here are several key housing and business provisions in the Working Families Tax Cuts law that apply to the 2025 tax year and beyond:

For Businesses:

• Full expensing (100% bonus depreciation) restored for business investments made after Jan. 19, 2025.
• Increased Section 179 limits and phase-outs for small business expensing made effective for all of 2025.
• The Section 460(e) Completed Contract rules expanded to include condominiums, in addition to single-family homes. This is a key tax accounting provision that ensures that home builders are not taxed on deposits paid by a buyer during construction of a single-family home. This bill extends the same tax treatment to deposits paid by condominium buyers during the construction phase, effective for contracts entered into after July 4, 2025.

For Individuals:

• Increased Standard Deduction: For 2025, the deduction increases to $31,500 for married couples filing jointly and $15,750 for single filers. These amounts are adjusted annually for inflation
• Enhanced Standard Deduction for Seniors: Effective for 2025 through 2028, individuals aged 65 and older may claim an additional deduction of $6,000 on top of the standard deduction. This deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).
• Increased SALT deduction: The cap on state and local tax deduction (SALT) is temporarily increased from $10,000 to $40,000, effective for 2025 through 2029, with a 1% inflation adjustment after 2025. The increased cap phases out for households with incomes above $500,000, but the cap will not fall below $10,000.
• No Tax on Tips & Overtime: Up to $25,000 in tips and $12,500 in overtime ($25,000 for married filing jointly) are deductible for individuals with incomes under $150,000 ($300,000 married filing jointly).

Additional tax changes kicked in for 2026, including:

• An increase in the estate tax exemption,
• An increase in the 1099 reporting threshold, and
• The ability to deduct private mortgage insurance premiums. 

Visit irs.gov for more information on key tax changes in the law.

NAHB is providing this information for general information only. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind nor should it be construed as such. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisers. Before making any decision or taking any action on this information, you should consult a qualified professional adviser to whom you have provided all of the facts applicable to your particular situation or question.