From Deductions to Depreciation: Real Estate Tax Impacts of the One Big Beautiful Bill Act

By David Sobochan, CPA, MT | July 16, 2025

On July 4, 2025, President Donald Trump signed into law the One Big Beautiful Bill Act (OBBBA). One of the benefits we receive as members of NAIOP is the tireless efforts made by the government affairs team. Below is a summary of the provisions that impact the commercial real estate industry as well as commentary on some issues that NAIOP’s government affairs team overcame in the process.

Business State and Local Taxes Deduction (SALT): The legislation preserves the full deductibility of business state and local taxes. During the reconciliation process, Congress contemplated everything from eliminating SALT deductions (which included real estate taxes) to allowing 50% SALT deductions. Full deductibility was a win for the commercial real estate industry.

Section 199A: The legislation permanently extends the 20% deduction for pass-through business income and REIT dividends. This provision provides some parity between the tax rates to which pass-through business owners (29.6%) and corporations (21%) are subject.

Bonus Depreciation: The legislation permanently extends 100% bonus depreciation for assets placed into service after Jan. 19, 2025. Taxpayers will need to be aware of the “written binding contract rule” for contracts entered into prior to Jan. 20, 2025, as this rule could prevent 100% bonus depreciation from applying – in which case, the taxpayer would still apply the rules in existence prior to the passage of OBBBA, which contemplated bonus depreciation rates of 60% for assets placed in 2024; 40% for assets placed into service in 2025; 20% for assets placed into service in 2026; and 0% after the 2026 tax year.