T
he US House of Representatives passed the One Big Beautiful Bill Act, a comprehensive tax reform package that includes several key victories for National Association of REALTORS (NAR) members. NAR's advocacy team successfully secured its top five tax priorities in the bill, which directly support NAR members and the broader real estate economy.
The bill permanently increases the qualified business income deduction from 20% to 23%, providing significant tax relief to over 90% of NAR members who are independent contractors or small business owners. It also quadruples the state and local tax deduction cap from $10,000 to $40,000 for households earning under $500,000, though the marriage penalty remains in place.
The bill makes individual tax rates permanent and indexes them for inflation, a move backed by 86% of voters in NAR's national survey. Additionally, it preserves and makes permanent the mortgage interest deduction, which is crucial for current and future homeowners. The legislation also protects Section 1031 like-kind exchanges and leaves business SALT deductions intact for most real estate professionals.
The bill includes other REALTOR-supported provisions that strengthen housing affordability, investment, and generational wealth, such as enhancements to the low-income housing tax credit, estate tax certainty, renewed Opportunity Zone incentives, and tax-advantaged child investment accounts. A recent NAR voter survey found that 80% of voters supported key provisions impacting the real estate economy.
NAR executive vice president Shannon McGahn praised House leaders for taking this important step with the tax reform bill, which supports hardworking families and strengthens the real estate economy. With House approval secured, the bill now moves to the Senate for further consideration.
The top five NAR tax priorities include:
1. Qualified Business Income Deduction: The bill permanently increases the QBI deduction from 20% to 23%, benefiting over 90% of NAR members.
2. State and Local Tax Deduction (SALT): The SALT deduction cap is quadrupled from $10,000 to $40,000 for households earning under $500,000.
3. Individual Tax Rates: Current individual tax rates are made permanent and indexed for inflation, aiding taxpayers and improving affordability for prospective homebuyers.
4. Mortgage Interest Deduction: The bill preserves and makes permanent the MID at its current level, maintaining a key tax benefit for homeowners.
5. Business SALT and 1031 Like-Kind Exchanges: The draft bill protects Section 1031 like-kind exchanges and includes no changes for most businesses deducting state and local taxes.
Additional positive tax provisions in the bill include enhancements to the low-income housing tax credit, increased child tax credits, and permanent estate and gift tax thresholds.
