How the One Big Beautiful Bill May Affect Real Estate This Tax Season

This week on the Breakdown, we cover the potential impact and changes the One Big Beautiful Bill could have on the upcoming tax season. We’ll discuss what the Big Beautiful Bill is, how key changes will affect both individuals and the real estate industry, and the ways it could alter the tax landscape moving forward. 

The Rundown on the One Big Beautiful Bill Act

One of the biggest shake-ups of last year, both politically and financially, was the passing of the One Big Beautiful Bill Act (often shortened to OBBB). This historic and controversial bill, covering a range of areas from Medicaid to taxes to student loans, strongly divided members of the House and Senate for months. Politicians on both sides of the aisle went head-to-head on the bill’s sweeping provisions, fighting to include and exclude a number of items, ending in the House of Representatives with a narrow passing vote of 218-214 on July 4th, 2025.

According to the White House, the OBBB is “a once-in-a-generation piece of legislation that makes good on [Trump’s] campaign promises and puts America First,” aiming to promote economic growth and offer tax relief for Americans. But the enormous bill—which totals almost 900 pages—includes much more than just tax cuts for Americans. The Big Beautiful Bill will:

• Increase funding for Immigration and Customs Enforcement (ICE) 
• Pay to finish building the wall at the U.S.-Mexico border 
• Eliminate some student loan deferment 
• Tighten funding for Medicaid 
• Lower funding for food stamps 

And that’s just the tip of the iceberg. The OBBB covers a lot of ground, making significant changes on many fronts, but one area that has been heavily affected by the bill is taxes. The changes outlined in this bill alter many aspects of tax filing procedures, both for individuals and businesses alike. With tax season beginning this week, it’s vital to understand these changes and how they will affect your tax process in the coming months so you can file with ease.

Key Tax Changes for Individuals This Tax Season 

As mentioned, the OBBB is massive. The list of changes for taxes alone is sprawling, but several key changes stand out for individual taxpayers—changes that could potentially increase returns for Americans by up to 15% to 20%.

The first of these changes is to the standard deduction for taxpayers. Before the OBBB went into effect, standard deduction limits were $15,000 for singles and $30,000 for those married filing jointly. The OBBB increases these deductions for both in 2025, with single deductions up to $15,750 and joint deductions up to $31,500.

Older adults also get a significant bonus deduction under the OBBB. Previously, the law allowed $1,600 for adults 65 or older, with $2,000 for those who are unmarried or have a non-surviving spouse. Now, the law allows $7,600 for adults 65 and older, with $8,000 for those who are unmarried or have a non-surviving spouse, from 2025 to 2028.

Many are looking forward to no tax on tips or overtime due to the OBBB. There was previously no law or provision that allowed deductions for these, but under the OBBB, taxpayers can deduct up to $25,000 on tips per year from 2025 to 2028 and can deduct $12,500 of overtime per taxpayer from 2025 to 2028.

Bought a brand-new car this year? Taxpayers can also now deduct up to $10,000 of annual car loan interest on new loans from 2025 to 2028, a law that previously did not exist or offer any deductions before the OBBB.

For those with children, the child tax credit is increasing from $2,000 to $2,200. Additionally, the OBBB outlines “Trump Accounts” that automatically input $1,000 for new babies born between 2025 and 2028, also allowing parents to add funds that cannot be touched until the child turns 18.

Finally, the OBBB largely increases the SALT (State and Local Tax) deduction limits for the foreseeable future. Previously, the limit sat at $10,000, but under the OBBB, taxpayers can deduct up to $40,000 for 2025. This number will increase by 1% through 2029 before reverting to its original number of $10,000 in 2030.

Below is a table with the previous laws and a comparison to the new laws under the OBBB:

Original Law                                                                          OBBB Law
Standard Deduction
$15,000 for single filers; $30,000 married filing jointly in 2025	$15,750 for single filers; $31,500 married filing jointly in 2025
Bonus Deduction for Older Adults
$1,600 for 65 and older in 2025; $2,000 unmarried or non-living spouse in 2025	$7,600 for 65 and older; $8,000 unmarried or non-living spouse; both between 2025 and 2028
Tax on Tips
N/A	Deduct up to $25,000 per year between 2025 and 2028
Tax on overtime
N/A	Deduct up to $12,500 per taxpayer between 2025 and 2028
Tax on Car Loan Interest
N/A	Deduct up to $10,000 of annual interest between 2025 and 2028
Child Tax Credit
Maximum credit of $2,000 per child through 2025; refundable portion $1,700 in 2025	Maximum credit of $2,200 per child through 2025; refundable portion $1,700 adjusted for inflation in 2025
Trump Accounts for Children
N/A	One-time credit of $1,000 per child born between 2025 and 2028
State and Local Taxes (SALT)
$10,000 limit through 2025	$40,000 limit through 2025; increases by 1% through 2029; reverts back to original $10,000 in 2030

Source: CNBC

Tax Changes and Updates That Affect Real Estate Investors

There's one important impact of the OBBB to know for your bottom line: The return of familiar TCJA tax strategies.

One of the most important OBBB tax updates for real estate investors and landlords is the permanent implementation of the TCJA (Tax Cuts and Jobs Act), which was created in 2017 and was set to expire at the end of 2025. The TCJA offered a long list of tax deductions and breaks for Americans, specifically those who owned property or were running a business, and with the OBBB, these changes are here to stay (with a few minor changes).

The Qualified Business Income (QBI) deduction, better known as the pass-through deduction, has been extended permanently. Landlords who qualify—and most generally do—can deduct up to 20% of their net income from their taxes by identifying as a pass-through entity (in which your business profits and losses are paid on your individual taxes). This is a common tax deduction for rental business owners that will continue through the OBBB instead of expiring as it was originally intended to.

Another provision of the original TCJA was 100% bonus depreciation on qualifying properties in the first year, with different percentage cutoffs for homes purchased in subsequent years. This depreciation was slowly being phased down and out, but under the OBBB, bonus depreciation is back at 100%. This offers homebuyers a larger depreciation deduction on new properties.

The OBBB has also reinstated the Pease limitations that were repealed by the original TCJA, blocking high earning individuals from fully itemizing their deductions. The previous Pease limitations reduced itemized deductions by 3% of income above certain thresholds, but with its reinstatement, deductions are now reduced by 2/37ths, and the thresholds are increased to the 37% tax bracket. If you’re in this high earning range, your tax benefits on mortgage payments may decrease after this tax season since the rule applies starting in 2026.

The TCJA affects more than just real estate, solidifying tax brackets, standard deductions, estate tax exemption, and more. For real estate investors and rental business owners, though, the now-permanent rules of the TCJA will generally allow larger deductions that will allow further business growth.

On top of that, investors now no longer have to worry about racing against the TCJA expiration date to build, buy, or make real estate moves; instead, they can sit back and breathe while making real estate decisions and plans for the years ahead.

The Impact of the OBBB on the Tax Landscape 

It’s clear that the Big Beautiful Bill will have lasting impacts on tax filing for Americans in coming years, with some of its items already active, some yet to come, and other eliminations already being put into place. These changes are guaranteed to have both short-term and long-term effects on the tax landscape—and some will be immediate and noticeable for taxpayers as soon as this tax season.

The aim of the One Big Beautiful Bill Act is to stimulate economic growth and offer tax relief, which sounds promising as preparation for tax season ramps up. We have yet to see the effects of these changes and provisions in action, but with the tax season beginning on January 26th and tax returns on the way shortly after, we’re sure to quickly learn how the OBBB will function in practice.