ICYMI: Trump Signs One Big Beautiful Bill Act
July 15, 2025
The Republican reconciliation legislation — One Big Beautiful Bill Act (OBBBA) — passed the Senate 51-50 (with Vice President Vance breaking the tie) and the House 218-214. President Donald Trump signed it into law on July 4th.
Why it matters: The OBBBA extends many of the
2017 Tax Cuts and Jobs Act (TCJA) provisions and delivers on many of the President’s campaign priorities.
The big picture: A variety of factions made the vote math in the 53-47 divided Senate and the 220-213 divided House.
- SALT: The law largely preserves the $40,000 deduction for those making under $500,000 in House language. Notably, after five years, it permanently reverts to a $10,000 deduction. It also removed the House prohibition that would have limited state workarounds for certain pass-through entities.
- Energy Tax Credits: The treatment of many energy-related tax credits remained one of the stickiest issues for lawmakers. While the delicate balance struck ensured passage, jockeying will continue as Treasury implements rulemaking and members of the Freedom Caucus seek to codify some of the side agreements purportedly struck in the early morning hours.
- Medicaid and Overall Spending: The changes to Medicaid are the primary driver of budget savings, but deficit hawks complained the cuts are not deep enough, while some moderates were concerned the cuts go too far. Sen. Tillis’s main objection to the bill was that too many people would lose health insurance. Murkowski and Collins were also concerned about the Medicaid provisions.
What they’re saying: For commercial and multifamily real estate, the topline issues remain largely the same.
- Section 899: The retaliatory tax on foreign entities was removed from the bill during Senate consideration.
- 199A Passthrough: The qualified business income deduction remains at 20% and was made permanent.
- Low-Income Housing Tax Credit (LIHTC) Boost: The law permanently increases the state housing credit ceiling by 12.5% and lowers the tax-exempt bond requirements, similar to the 2024 Wyden-Smith Bill.
- Renews Opportunity Zones: The program was made permanent with periodically-updated zone designations, starting on Jan. 1, 2027, and ending on Dec. 31, 2033.
- Bonus Depreciation Made Permanent: Allows full expensing of qualifying property.
- Interest Expense Deduction: Increases the cap on the deductibility of business interest expense under 163(j) for taxable years beginning after 2024 and before 2030 by allowing the EBITDA definition of taxable income.
- Note that the 2017 TCJA law allows real property trade or business to elect not to be subject to the cap, but they must be depreciated using the alternative depreciation system.
- Immediate Factory Expensing: The qualified production property allows full, immediate expensing for certain manufacturing buildings with construction beginning in 2025 through 2029 and placed into service.
- The legislation limits the deduction to owner-occupied facilities that manufacture, produce, or refine any tangible personal property.
- Office space associated with the facility is explicitly excluded from the definition. It also excludes leased facilities.
Yes, but the real estate industry did have a couple of major victories on:
- No 899 Retaliatory Tax: CREFC and other organizations pushed back against the provision, which was removed, that could have had a chilling impact on foreign investment into the U.S.
- No Business SALT Cap: There are no provisions to cap business state and local income or property taxes.
- No Carried Interest Rollback: President Trump had reiterated his push to close this “loophole” in a call last week with Speaker Mike Johnson (R-LA). However, the OBBBA does not change carried interest treatment.
Contact
David McCarthy (
dmccarthy@crefc.org) with any questions.