Page 20 - Builder Brief June 2025

L E G I S L A T I V E
HOUSE APPROVES TAX BILL WITH KEY HOUSING
AND BUSINESS PROVISIONS
By a vote of 215-214, the House early in the morning
on May 22 narrowly passed the One Big Beautiful Bill Act,
sweeping tax and domestic policy legislation that NAHB
believes is very positive for small businesses, real estate
and our members. As the measure made its way through
the House, NAHB sent a letter of support to House leaders
while also urging Congress to make targeted improvements
to the bill.
In the past months, NAHB has raised concerns on the
potential elimination of businesses’ ability to deduct property
taxes, changes to the mortgage interest deduction, and
the elimination of energy tax credits. And throughout this
process, we have also supported the effort to increase the
$10,000 cap on state and local taxes (SALT) for individuals,
which is a priority for our members in high-cost states.
NAHB secured several key victories in the House
tax bill:
Business SALT was not included, meaning that
businesses can deduct property taxes paid to state or
local governments in full.
•
The individual SALT limit would increase from $10,000 up
to $40,000, for taxpayers earning less than $500,000.
The original bill increased the limit to $30,000, and NAHB
successfully urged lawmakers to raise this threshold.
•
The Low-Income Housing Tax Credit would be expanded.
•
The Tax Cuts and Jobs Act would be made permanent,
including the tax rate structure and increased exemptions
for the Alternative Minimum Tax.
•
The Section 199A Qualified Business Income Deduction,
which helps provide tax parity for pass-through entities,
would be enhanced by increasing the deduction from
20% to 23%.
•
The estate tax exemption would increase to $15 million.
•
100% bonus depreciation would be restored.
•
Opportunity Zones would be extended.
The bill also replaces a long-standing limitation on
itemized deductions known as the Pease limitation with a
new mechanism, which slightly reduces the value of itemized
deductions for high-income earners.
Energy Tax Credits Face Early Termination
The bill proposes to end several energy tax credits used
in the housing industry:
Section 45L New Energy Efficient Home Tax Credit would
be eliminated after Dec. 31, 2025 (currently runs through
20 JUNE 2025 | GREATER SAN ANTONIO BUILDERS ASSOCIATION
2032). This is a $2,500 tax credit for energy efficient new
homes obtaining Energy Star certification, with a higher tier
for net-zero ready homes. This provision includes a special
rule allowing homes that have commenced construction
before May 12, 2025, to qualify for the credit if they are
acquired by Dec. 31, 2026.
Section 25D Residential Clean Energy Credit would
be eliminated after Dec. 31, 2025 (currently runs through
2032). Under current law, taxpayers may claim a credit for
residential expenditures for solar electric property, solar
water heating property, fuel cell property, small wind energy
property, geothermal heat pump property, and battery
storage property. The value of the credit is 30% of the
expenditures.
Section 48E Clean Electricity Tax Credit, a 30% tax
credit for installing clean power technology such as solar, and
previously known as the Investment Tax Credit. 48E would
be eliminated for projects that begin construction more
than 60 days after this bill is signed into law. Furthermore,
any remaining eligible projects must be placed in service by
Dec. 31, 2028. The bill also prohibits companies that lease
eligible 48E technology from claiming the credit, which is
directed to solar companies that offer free solar systems
to home owners.
In the earliest stages of drafting this tax bill, Republicans
targeted a series of energy tax credits — including key credits
used by our industry — because of their connection to one of
the Biden administration’s top legislative accomplishments,