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 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): Enact the Affordable Housing 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: Support provisions included in the Opportunity Zones Transparency, Extension, and Improvement Act to maximize the potential of Opportunity Zones while also enhancing the incentive to promote the rehabilitation of existing properties.
- Converting Underutilized Commercial Property into Housing: Pass the Revitalizing Downtowns and Main Streets Act to establish a temporary and allocated 20-percent tax credit to convert commercial property into residential use and spur additional affordable housing supply.
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 proposals that would reduce investment in apartments and ultimately limit the supply of housing, including those that would:
- Eliminate deferral of taxable gain from like-kind exchanges;
- Tax carried interest as ordinary income;
- Impose the net investment income tax (NIIT) on active income while potentially increasing the NIIT rate;
- Require 100-percent recapture of depreciation deductions as ordinary income for real estate; and
- Restrict the deductibility of state and local taxes (e.g., income, property and industry-related taxes) by pass-through entities.
