Let’s take a closer look at the relevant provisions:

Permanent extension of the 2017 (Tax Cuts and Jobs Act) personal income tax rates, which were scheduled to sunset after 2025. The highest marginal tax rate will remain at 37%, with inflation adjustments (protecting more income from taxes) for the 10%, 12% and 22% brackets. The standard deduction was also permanently increased (nearly doubled!) to $15,750 for single filers and $31,500 for joint filers. There is an additional $6,000 deduction for seniors through 2028.

Permanent protection for mortgage interest deduction. This significant tax benefit for homeowners (especially in the early years of a mortgage), is now unassailable. The maximum mortgage debt (on which all mortgage interest is deductible) remains set at $750,000.

A temporary (5-year) quadrupling of State and Local Tax (“SALT”) deductions. The previous SALT deduction was $10,000. Now most people will be able to use up to $40,000 of state and local taxes paid to reduce federal taxable income. If you own a big home in a state/municipality with high property tax rates, this could be a major benefit.

Permanent protection for 1031 exchanges. These ‘like kind’ exchanges – used extensively by property investors – allow for the deferral of capital gains taxes on properties sold, if a home of equal or greater value is purchased within a few months of the sale date.

Permanent enhancement of the Low-Income Housing Tax Credit. The LIHTC program encourages private-sector investment in affordable housing by offering a 10-year stream of tax credits, reducing reliance on government-financed construction. Under the OBBBA, the total amount of tax credits available was significantly expanded.

Permanent protection for qualified business income deductions. Small business owners, gig workers and real estate agents can continue to deduct up to 20% of their ‘qualified business income’ from federally taxable income. This deduction was set to expire after 2025. Now it’s permanent.

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