Housing Industry Largely Supportive of House-Passed Funding Bill

Now that President Trump's "Big, Beautiful Bill" passed the House by the slimmest of margins (215-214), it just needs to pass the Senate to become law. The behemoth bit of legislation clocks in at a whopping 1,116 pages, and there are plenty of pertinent rules and major changes that could affect building materials industry. 

The NAHB (along with other associations like the National Retail Federation) has voiced support for the bill's potential impact on small businesses and real estate in general. However, it also has several points of contention with specific measures. Below are some of the most relevant shifts that could be coming to the U.S. housing ecosystem, a presented by the NAHB.

Firstly, the association touts the following as "wins" for the housing industry in the bill's final iteration:

• Business SALT was not included, meaning that businesses can deduct property taxes paid to state or local governments in full.
• The individual SALT limit would increase from $10,000 up to $40,000, for taxpayers earning less than $500,000. The original bill increased the limit to $30,000, and NAHB successfully urged lawmakers to raise this threshold.
• The Low-Income Housing Tax Credit would be expanded.
• The Tax Cuts and Jobs Act would be made permanent, including the tax rate structure and increased exemptions for the Alternative Minimum Tax.
• The Section 199A Qualified Business Income Deduction, which helps provide tax parity for pass-through entities, would be enhanced by increasing the deduction from 20% to 23%.
• The estate tax exemption would increase to $15 million.
• 100% bonus depreciation would be restored.
• Opportunity Zones would be extended.

It also touts these key provisions:

• Regulatory reform. The legislation contains strong regulatory reform provisions, including the requirement for federal agencies to consider both direct and indirect costs associated with any new regulation, as well as requiring congressional approval for major rules.
• Workforce development. The bill provides for a new Workforce Pell grant program that will help prepare students for high-paying, sustainable jobs in the country’s most in-demand industries.
• Timber production. According to NAHB, the U.S. does not produce sufficient lumber to meet the housing industry’s demand, requiring costly imports. The bill would boost domestic production of timber from both United States Forest Service and Bureau of Land Management lands. NAHB says increasing domestic lumber production from federal lands represents a win-win for housing affordability and the resilience of our national forests.

However, the association raises major concern over the bill's axing of various energy-related tax credits:

Section 45L New Energy Efficient Home Tax Credit would be eliminated after Dec. 31, 2025 (currently runs through 2032). This is a $2,500 tax credit for energy efficient new homes obtaining Energy Star certification, with a higher tier for net-zero ready homes. This provision includes a special rule allowing homes that have commenced construction before May 12, 2025, to qualify for the credit if they are acquired by Dec. 31, 2026.

Section 25D Residential Clean Energy Credit would be eliminated after Dec. 31, 2025 (currently runs through 2032). Under current law, taxpayers may claim a credit for residential expenditures for solar electric property, solar water heating property, fuel cell property, small wind energy property, geothermal heat pump property, and battery storage property. The value of the credit is 30% of the expenditures.

Section 48E Clean Electricity Tax Credit, a 30% tax credit for installing clean power technology such as solar, and previously known as the Investment Tax Credit. 48E would be eliminated for projects that begin construction more than 60 days after this bill is signed into law. Furthermore, any remaining eligible projects must be placed in service by Dec. 31, 2028. The bill also prohibits companies that lease eligible 48E technology from claiming the credit, which is directed to solar companies that offer free solar systems to home owners. 

As it writes:
"NAHB does not support the early termination of these tax credits. NAHB believes the most effective way to promote energy efficiency is through voluntary tax incentives. We also recognize that builders, remodelers, and home owners made strategic decisions based on these tax credits, and at a minimum, Congress must provide a sufficient transition period."