Here’s how Trump’s ‘big beautiful bill’ would impact housing

By Samantha Delouya, CNN

(CNN) — Americans face a shortage of affordable homes, but the mega tax and spending bill championed by the Trump administration has the potential to shape housing affordability for years to come.

The “One Big Beautiful Bill” Act, a linchpin of President Donald Trump’s economic agenda, is primarily a sweeping tax overhaul, intended to make the 2017 tax cuts passed during Trump’s first administration permanent. The version passed by House Republicans last month, now being deliberated in the Senate, would also push more Americans off Medicaid and food assistance, according to multiple assessments. The bill is also estimated to add trillions of dollars to the national debt over the next decade.

But tucked inside the bill’s more than 1,000 pages are a set of housing-related tax changes that could expand affordable housing and deliver new tax breaks to homeowners in higher-cost states. Critics, however, warn the bill may also tilt the playing field in favor of wealthy buyers and powerful landlords, particularly through a provision that blocks local governments from regulating rent-setting algorithms for the next decade.

“Broadly speaking, this is not intended to be a housing bill,” said Andy Winkler, the director of the Bipartisan Policy Center’s housing and infrastructure projects. “But there are several provisions that, if they do get enacted, could affect housing supply, preservation and affordability.”

Here’s what you should know about how the bill may affect housing:

Expansion of the Low-Income Housing Tax Credit

America’s home affordability woes are partially driven by a shortage of available homes for sale, which has driven up costs. A Zillow analysis estimated America was short 4.5 million homes in 2022.

Trump’s “big beautiful bill” includes provisions designed to address the shortage of low-income and moderate-income housing at a time when nearly half of American households spend more than 30% of their income on rent or mortgage payments, falling under the US Department of Housing and Urban Development’s definition of “cost-burdened.”

The House version of the bill extends and expands the Low-Income Housing Tax Credit (LIHTC), a federal program that incentivizes private investors to develop affordable rental housing for low-income tenants.

The bill restores and extends a temporary 12.5% increase in LIHTC allocations through 2029 and lowers the amount of government-issued bonds that developers are required to use to qualify for federal tax credits to build affordable housing.

Novogradac, an accounting firm that provides services for developers, estimates that 527,700 additional affordable rental homes could be financed between 2026 and 2035 if these provisions were to become law.

“The bill would have a decent impact on housing supply,” Winkler said. “And there’s a lot of interest in the Senate in doing more than what the House-passed version of the bill does for housing.”

“But they’re already having to walk a pretty tight rope to balance the cost of these expiring tax credits, not impact deficits too much and keep costs down to be able to have the bill move forward,” Winkler added.

Larger tax breaks for homeowners in high-tax states

The bill also raises the State and Local Tax (SALT) deduction, which allows taxpayers to deduct what they paid in state and local taxes — like income taxes and property taxes — from their federal tax bill. Under the 2017 Trump tax law, the deduction was capped at $10,000, no matter how much was paid. Under the House version of the new tax bill, that deduction would be raised to $40,000, allowing homeowners in high-tax states like New York and California to deduct more of their property taxes.

Jim Tobin, the CEO of the National Association of Home Builders, said the LIHTC and SALT deduction expansions, along with increased tax benefits for small businesses, would be beneficial to homebuilders.

“We believe the bill will provide certainty in taxation for most individuals that are needed to usher in continued economic growth at a time when the housing industry desperately needs it,” Tobin told CNN.

Rent-setting algorithms could skirt regulations

One provision buried in the House’s version of the bill would block states from regulating artificial intelligence models or automated decision systems. If that provision were to remain in the final bill, it would be a victory for companies that provide rent-setting algorithms to landlords.

One of the best-known of these companies, Texas-based RealPage, which uses non-public rent data from landlords to train its algorithms and create pricing recommendations, is facing legal challenges and potential regulation from at least eight states. The GOP tax bill would effectively put an end to the potential regulation.

Last month, a group of 40 state attorneys general signed a letter asking Congress to reject the measure.

“The impact of such a broad moratorium would be sweeping and wholly destructive of reasonable state efforts to prevent known harms associated with AI,” the letter read, directly citing states’ efforts to “protect renters when algorithms are used to set rent.”

Rising deficit could push mortgage rates higher

The housing provisions are a small part of the overall bill, which, overall, would add $2.4 trillion to the debt over the next decade, according to the Congressional Budget Office’s analysis.

Americans will feel that growing mountain of debt in the form of higher interest rates, economists warn.

When the government has a lot of debt, it needs to borrow money to keep paying the bills by selling Treasury bonds. If investors believe the government is more leveraged, they will demand higher interest rates to compensate for the risk of their investment.

Though it may seem like an overly broad financial concept, those higher interest rates affect housing in the form of higher mortgage rates and higher borrowing rates for homebuilders, which can then translate to higher costs for new construction.

At a time when average mortgage rates are hovering near 7%, a further rise in borrowing costs would make homeownership more difficult for some Americans.

“We care quite a lot about higher interest rates in the housing world,” Winkler said. “It means people buying fewer homes and people being able to build fewer homes.”

“Some of these broader impacts are just as important, if not more important than some of the specific housing provisions,” he added.

The White House’s plan to curb government spending could do even more damage to housing affordability.

Last month, the White House released its budget proposal for 2026. It included steep cuts to housing and community development programs.

David Dworkin, the president of the National Housing Conference, a nonprofit that advocates for affordable housing solutions, told CNN that he is hopeful Congress will not agree to cut housing programs suggested by the White House.

“The president’s budget is an opening proposal,” Dworkin said. Trump “put out an executive order addressing the issue of housing affordability on Day 1 and we support that emphasis. We disagree with the budget proposals around housing, and we look forward to reconciling that with the administration.”

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