2025 Tax Legislation Landscape
At the end of 2025, critical tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act (TCJA) expire. NMHC believes Congress should make permanent the following provisions:
- Reduced Individual Tax Rates & 20-Percent Pass-Through Deduction: The TCJA lowered taxes on the pass-through entities (e.g., sole proprietorships, LLCs, partnerships, and S Corporations) and REITs through 2025 by:
- Reducing marginal individual tax rates; and
- Providing a 20-percent tax deduction for qualifying pass-through income and REIT dividends (commonly referred to as Section 199A), effectively reducing the top tax rate on qualifying business income to 29.6 percent.
- Estate Tax Exemption Amount: In TCJA, Congress, doubled the estate tax exclusion through 2025 while retaining a top tax rate of 40 percent and stepped-up basis rules.
Support Housing Affordability Initiatives
A 2025 tax bill presents an opportunity to boost housing supply by:
- Expanding the Low-Income Housing Tax Credit (LIHTC): Support the Affordable Housing Credit Improvement Act of 2023 (AHCIA) to finance up to 1.94 million additional affordable units over 10 years.
- Enacting the Workforce Housing Tax Credit Act: Establish a new tax credit, modeled on LIHTC, to produce affordable rental housing for households earning up to 100% of area median income.
- Reinvigorating Opportunity Zones: NMHC supports provisions included in the Opportunity Zones Transparency, Extension and Improvement Act to maximize the potential of Opportunity Zones.
Oppose Counterproductive Revenue Offsets
Critical real estate tax provisions are often identified as revenue-raisers to pay for federal spending increases. NMHC is urging Congress to reject the proposals that would reduce investment in apartments and ultimately limit the supply of housing, including those proposed in President Biden’s Fiscal Year 2025 Budget and subsequently that would:
- Increase the top individual marginal individual income and capital gains tax rates;
- Impose the net investment income tax (NIIT) on active income while increasing the NIIT rate;
- Limit deferral of taxable gain from like-kind exchanges;
- Tax carried interest as ordinary income;
- Tax unrealized capital gains at death; Require 100-percent recapture of depreciation deductions as ordinary income for real estate; and
- Cap rent increases to 5 percent or forego faster depreciation write-offs.
