Here are the real estate measures in Trump’s “Big, Beautiful” Bill”

The $4.5 trillion “big, beautiful” spending bill is heading to President Donald Trump’s desk, delivering a long-sought expansion of a key source of housing funding and rebooting the Opportunity Zone program. 

The package makes permanent a number of tax benefits approved in 2017 that affect the real estate industry, including the mortgage interest deduction, the estate and lifetime gift tax exemption and the deduction for pass-through entities (such as partnerships and S corporations). It also increases the cap on state and local tax deductions, renews the Qualified Opportunity Zone program and expands low-income housing tax credits. 

At the same time, it cuts green energy credits, which could force states to abandon solar panel, wind turbine and other clean energy projects — meaning, among many other things, a loss of lucrative construction jobs.  

The reconciliation measure slashes social safety net funding, including nearly $1 trillion from Medicaid, which would result in an estimated 11.8 million people becoming uninsured by 2034. The bill will add $3.4 trillion to the national deficit between 2025 and 2034, the Congressional Budget Office has estimated. 

According to an analysis by the Institute on Taxation and Economic Policy, 70 percent of the bill’s net tax cuts would benefit the richest fifth of Americans in 2026. The wealthiest 1 percent of Americans would receive net tax cuts of $117 billion in 2026, while the 20 percent of middle-income taxpayers would receive $53 billion  

Here’s an overview of some of the key housing and real estate-related items in the bill: 

SALT

In 2017, the Trump administration capped deductions for state and local taxes, or SALT, from federal income tax bills at $10,000. The move was widely seen as a direct attack on high-tax blue states, including New York, New Jersey and California. The change appeared to have an initial chilling effect on home sales in some of these markets, which wore off as people adjusted to the change and as interest rates plummeted during the pandemic.  

The reconciliation package increases the deduction to $40,000 in 2025, with annual increases of about 1 percent every year after until 2029, at which point the cap goes back to $10,000.

Qualified Opportunity Zone program

The program, launched as part of the 2017 tax law, allowed investors to defer capital gains taxes if they funnel those profits into areas designated as distressed. 

The reconciliation package makes the program permanent, rather than allowing investors to avoid capital gains taxes until 2033, as the House version of the bill proposed. Under the rebooted program, capital gains can be deferred for five years (on a rolling basis), or until the investment is sold, whichever happens first. 

Governors across the U.S. designated some 8,764 Opportunity Zones as part of the original program, and according to the U.S. Department of the Treasury, these zones spurred $89 billion in private investment between 2019 and 2022.

The bill requires states to designate new zones every 10 years, starting January 1, 2027.

The program has been criticized as a giveaway to developers and for failing to drive investment in deeply distressed areas. A recent report by New York University’s Furman Center, for instance, found that housing built in Opportunity Zones within New York City was disproportionately market-rate and located in non-low-income districts. 

Some of the changes in the bill seem to acknowledge criticisms of the program. 

For one, states can no longer select tracts adjacent to low-income tracts, a feature that resulted in higher-income areas being designated as Opportunity Zones. The new program also sets lower income thresholds than its predecessor. States now can only designate areas where the median family income is no more than 70 percent of the area median income, instead of 80 percent. Tracts can also be designated if they have a poverty rate of 20 percent or more. 

The House version required a third of a state’s zones to be in rural areas, but the latest bill does not include that mandate. The measure, however, includes additional benefits for investments in these areas. Investors in metropolitan areas realize a 10 percent step-up basis (resulting in a discount on their capital gains taxes) after parking their investment for five years. Investors in rural zones get a 30 percent discount. 

Some proponents of the program have raised concerns that the sunset of the old program in 2026 and the rollout of the new one leaves a gap for investors who realize capital gains next year. 

Low-income Housing Tax Credits 

These credits, which developers sell to private investors to raise capital for their housing projects, have helped finance more than 3.5 million housing units since 1986. 

States have a certain number of credits they can allocate each year, known as 9 percent credits. The bill makes a 12 percent increase in the allocation of those credits permanent. 

It also includes a long-sought change to 4 percent credits. These credits can automatically be accessed for projects that are at least 50 percent financed by private activity bonds, known as the 50 percent rule. The credits are limited, however, because states have an annual limit (known as a volume cap) on how many private activity bonds they can issue. The bill decreases the 50 percent threshold to 25 percent. 

The National Housing Conference estimates that these changes could lead to the creation or preservation of more than one million additional affordable rentals between 2026 and 2035.