Navigating the First Tax Season Under the OBBBA

Eric Schmutz for Market Share Blog | April 15, 2026

This past April 15 marks the first Tax Day under the One Big Beautiful Bill Act (OBBBA). Signed into law on July 4, 2025, this landmark legislation introduces significant benefits for the commercial real estate sector. NAIOP was a strong advocate for the commercial real estate industry during the negotiation of OBBBA and has continued to engage with the Treasury Department and the Internal Revenue Service (IRS) as regulations to implement provisions important to NAIOP members have been promulgated.

Below are summaries of these key provisions and the strategic efforts undertaken by NAIOP’s government affairs team to ensure our members can fully leverage them.

Permanent 100% Bonus Depreciation: Perhaps the most impactful provision of the new law is the permanent extension of 100% bonus depreciation for assets placed into service after Jan. 19, 2025. By allowing businesses to deduct the full cost of qualifying assets in the year they are put into service, this policy provides the long-term certainty necessary for strategic investment. This permanent extension creates a powerful incentive for owners to modernize facilities, automate production and reinvest in critical equipment, aligning tax strategy with immediate operational needs.

Navigating Section 163(j)(7) and New IRS Guidance: The transition from the Tax Cuts and Jobs Act of 2017 (TCJA) to the OBBBA created a technical hurdle for many in the industry. Under the TCJA, real property trades or businesses (RPTOB) were often forced to make irrevocable elections to either take bonus depreciation or avoid stricter limits on business interest deductions.

To address this, the IRS recently issued Revenue Procedure 2026-17. This guidance is essential for taxpayers who made an RPTOB election under Section 163(j)(7) prior to Jan. 20, 2025. It allows businesses to retroactively withdraw elections made for the 2022, 2023 or 2024 tax years, effectively unlocking the ability to benefit from the updated bonus depreciation provisions.

NAIOP’s Advocacy in Action: The availability of this retroactive relief is a direct result of NAIOP’s advocacy:

• In February, NAIOP President and CEO Marc Selvitelli sent a  letter to Treasury Secretary Scott Bessent, urging expedited action to provide the clarifications real estate businesses needed before this year’s filing deadline.
• NAIOP members and staff also engaged directly with the House Ways and Means Committee to communicate the urgency of this issue to the Treasury Department.

Without this specific IRS guidance – which NAIOP and our industry allies worked to secure – many real estate businesses would have remained locked into prior elections, unable to access the full suite of benefits offered by the OBBBA.

Additional Real Estate Tax Benefits

Section 199A (Pass-Through Deduction): The new law permanently extends the 20% deduction for pass-through business income and REIT dividends. This creates better parity between pass-through owners (effective rate of 29.6%) and corporations (21%).