California Real Estate https://www.car.org/aboutus/mediacenter/news/2025senatetaxbill
The U.S. House of Representatives has passed its reconciliation package—including a wide-ranging tax reform plan—by a razor-thin margin of 215–214.
Included in the bill is a notable improvement to the State and Local Tax (SALT) deduction cap, raising it to $40,000 for individuals and married couples below certain income thresholds. Although the expanded deduction phases out beginning at $505,000 of income, it represents meaningful progress over the current $10,000 cap. This targeted relief reflects growing momentum in Congress to revisit SALT policy, with strong leadership from lawmakers in high-cost states—particularly California Congresswoman Young Kim, a key advocate for this provision and a leading voice on behalf of the SALT Caucus.
While the bill features a range of tax provisions for individuals and businesses, it falls short in addressing several long-standing REALTOR® priorities. Notably absent are proposals to increase the capital gains exclusion on the sale of a primary residence and federal incentives to convert underused commercial properties into residential housing—both seen as critical tools to expand homeownership and housing supply. The bill would also codify the current mortgage interest deduction limit of $750,000 in perpetuity.
The package also includes provisions that support commercial real estate and affordable rental housing, including an extension of the Opportunity Zones program and enhancements to the Low-Income Housing Tax Credit (LIHTC). These measures will help drive investment in underserved communities and increase the availability of affordable rental housing—both central components of a balanced housing strategy.
The bill now moves to the Senate, where further changes are expected. As the two chambers work toward a final version, several provisions remain subject to negotiation before the legislation can be sent to the president for signature.
