The One Big Beautiful Bill Act, signed into law on July 4, 2025, brings a wave of tax reforms and financial incentives that directly benefit homeowners across the United States. This comprehensive legislation, an extension of the 2017 Tax Cuts and Jobs Act (TCJA), introduces several provisions designed to support homeownership, boost real estate investment, and provide tax relief for middle-class families. Below, we explore the key benefits this bill offers to homeowners, making it a landmark piece of legislation for those looking to buy, maintain, or invest in property.

1. Permanent Mortgage Insurance Premium Deduction

Homeowners with low down payment mortgages, such as those backed by private mortgage insurance (PMI), FHA, VA, or USDA, can now permanently deduct their mortgage insurance premiums. This deduction, which was last available in 2021 with an average value of $2,364 per qualified homeowner, provides significant tax relief. By making this deduction permanent, the bill ensures long-term financial relief for middle-class homeowners, particularly first-time buyers who rely on low down payment options to achieve homeownership. This provision supports affordability and allows homeowners to keep more of their income.

2. Increased State and Local Tax (SALT) Deduction Cap

The bill raises the cap on the State and Local Tax (SALT) deduction from $10,000 to $40,000 per household for tax years 2025–2029, with a phase-down for incomes above $500,000. This change is a major win for homeowners in high-tax states like New York, New Jersey, California, Massachusetts, and Illinois, where property taxes are often substantial. For example, at a 35% federal marginal tax rate, the increased SALT cap could translate to approximately $10,500 in annual tax savings for eligible homeowners. This makes homeownership more attractive in high-cost areas and provides relief to middle- and upper-middle-income households facing rising property taxes.

3. Permanent Mortgage Interest Deduction Cap

The legislation locks in the mortgage interest deduction cap at $750,000 of acquisition debt ($375,000 for single filers), ensuring stability for homeowners in high-cost housing markets. While there’s no expansion of this cap, its permanence provides certainty for borrowers planning purchases or refinances. Homeowners can confidently budget around this limit, knowing it won’t be reduced, which is particularly valuable in markets where home prices remain elevated.

4. Expansion of the Low-Income Housing Tax Credit (LIHTC)

The bill permanently increases the 9% Low-Income Housing Tax Credit (LIHTC) allocations by 12.5% and reduces the bond financing requirement for 4% LIHTCs from 50% to 25%. This expansion is expected to finance an additional 527,700 affordable rental homes between 2026 and 2035. While this primarily benefits developers, it indirectly supports homeowners by increasing the supply of affordable rental housing, which can ease competition in the entry-level homebuying market. A larger rental housing supply may stabilize housing costs, making it easier for potential buyers to transition to homeownership.

5. Extension of the Qualified Opportunity Zone (QOZ) Program

The One Big Beautiful Bill extends and enhances the Qualified Opportunity Zone (QOZ) program from 2027 to 2033, with a focus on rural investments and simplified incentives. Homeowners and real estate investors benefit from tax incentives, such as a 30% step-up in basis for rural Qualified Opportunity Funds after five years. This encourages investment in underserved communities, potentially increasing property values and improving local infrastructure, which can enhance the value of nearby homes.

6. Increased Standard Deduction

The bill temporarily boosts the standard deduction by $1,000 for individuals (to $16,000) and $2,000 for joint filers (to $32,000) through 2028. While this applies broadly, it benefits homeowners who may not itemize deductions, such as those in low-cost areas where mortgage interest and property taxes don’t exceed the standard deduction. This increase puts more money back in homeowners’ pockets, enhancing affordability for maintaining or upgrading their homes.

7. Support for Real Estate Investment

The bill reinstates 100% bonus depreciation for qualified property, including certain nonresidential real property, and increases the Qualified Business Income (QBI) deduction from 20% to 23% for pass-through businesses like real estate partnerships. These provisions benefit real estate investors and developers, potentially spurring more housing development. For homeowners, this can translate to increased property values and more robust local housing markets, especially in areas with active real estate investment.

8. Preservation of Section 1031 Like-Kind Exchanges

The legislation preserves Section 1031 like-kind exchanges, allowing real estate investors to defer capital gains taxes when swapping properties. This encourages property improvements and transactions, which can stimulate local housing markets. Homeowners benefit indirectly as vibrant real estate activity often leads to neighborhood improvements and rising home values.

9. New Deduction for Homebuyers

The bill introduces a new deduction specifically for homebuyers, though details on its scope and eligibility are still emerging. This provision is designed to provide additional tax relief for those entering the housing market, making homeownership more attainable, particularly for first-time buyers.

Conclusion

The One Big Beautiful Bill Act delivers a robust package of benefits for homeowners, from tax deductions and increased SALT caps to provisions that stimulate real estate investment and affordable housing development. These measures provide financial relief, enhance affordability, and create a more stable and attractive housing market. For homeowners in high-tax states, first-time buyers, and those leveraging mortgage insurance, this bill offers tangible savings and long-term certainty. As the housing market continues to evolve, these provisions position homeowners to thrive in an increasingly dynamic economic landscape.

For more information on how these changes may affect your personal finances, consider consulting a tax or financial professional to tailor these benefits to your specific situation.