July 7, 2025
On July 4th, President Trump signed into law the One Big Beautiful Bill Act (OBBB), following a fast-paced and highly strategic legislative path, leveraging the budget reconciliation process to bypass the usual 60-vote filibuster threshold in the Senate. As the OBBB moved from the House, to the Senate, then back to the House for final passage on July 3rd, the final bill has kept important affordable housing provisions intact, namely:
The final bill also makes permanent the 100% bonus depreciation for property acquired and placed in service on or after Jan. 19, 2025. The 100% bonus depreciation increases the incentive for tax credit investments. State and Local Tax (SALT) deductions for individuals are also increased from $10,000 to $40,000 from 2026 to 2029. For households with income above $500,000, the cap remains at $10,000. The SALT cap reverts to $10,000 for all households in 2030. This provision likely comes from a compromise by Senate Republicans, who replaced a permanent SALT cap of $40,000 with this provision.
The final bill does not include several proposed enhancements from earlier drafts, such as ordinary income eligibility for OZ deferral benefits or alignment of the substantial improvement test with the LIHTC rehabilitation standard. These omissions may still be revisited in future legislation or administrative guidance.
With the OBB now signed into law, the Treasury Department and IRS are expected to issue implementation guidance in the coming months. Investors and developers should prepare for updated regulations governing OZ designations, LIHTC allocation increases, and bond financing rules – many of which take effect in 2026 or 2027.
The Nelson Mullins team will continue to monitor implementation milestones and guide the release of final regulations and designations.
This article was written with assistance of summer associate Ben Smith.
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