By Matthew Berger, VP of Tax, Student Housing
Matthew M. Berger is Vice President of Tax and Vice President of Student Housing. In his tax role, Matthew represents the interests of the multifamily industry before Congress and federal agencies on tax issues.
On April 10, House Republicans narrowly passed a Senate-approved budget resolution by a 216-214 vote. The measure outlines a roadmap for extending key tax cuts, bolstering immigration enforcement, and supporting other Trump Administration priorities, while potentially seeking substantial reductions in Federal spending. Congress will draft underlying legislation implementing these priorities in the weeks ahead.
Tax Legislation Outlook
When Congress reconvenes, the House Ways and Means Committee and the Senate Finance Committee will continue crafting tax legislation aimed at extending key provisions from the Tax Cuts and Jobs Act (TCJA). These include:
- Reduced individual income tax rates
- The 20-percent deduction for qualified business income (Section 199A)
- The doubled estate tax exemption
These provisions are all scheduled to expire at the end of this year. Although both chambers agreed to adopt a unified budget resolution to initiate the tax-writing process, they diverge significantly in their approaches—posing potential delays in crafting a final bill.
House Approach
Under the House plan, lawmakers can pursue up to $4.5 trillion in net tax cuts. However, this figure assumes that all current-law tax cuts expire as scheduled. For the House Ways and Means Committee to fully unlock the $4.5 trillion in tax relief, other committees must identify $2 trillion in spending cuts. Any shortfall in spending reductions would proportionally reduce the scale of tax relief allowed.
Additionally, the Ways and Means Committee may also propose tax increases or spending cuts within its jurisdiction to help offset revenue losses. The House resolution also includes a reconciliation instruction to raise the debt ceiling by $4 trillion.
Senate Approach
The Senate plan utilizes a current-policy baseline—assuming that expiring tax cuts remain permanent and thus score as having no cost. Beyond that, the Senate may authorize up to $1.5 trillion in additional tax changes, with only $4 billion in mandatory spending cuts required across other committees.
The Senate resolution includes a reconciliation instruction to raise the debt ceiling by $5 trillion, $1 trillion more than the House proposal.
Reconciliation Timeline and Challenges
The contrasting fiscal strategies in the House and Senate suggest a drawn-out reconciliation process ahead. Finding $2 trillion in spending cuts that can satisfy both conservative and moderate lawmakers in both chambers will be especially challenging.
Meanwhile, the need to raise the debt ceiling could accelerate negotiations. The Treasury Department is currently relying on "extraordinary measures" to avert default, but the Congressional Budget Office warned on March 26 that those measures may be exhausted by August or September—though this timeline remains subject to change.
Multifamily Industry Priorities
NMHC and NAA are actively urging Congress to renew the expiring TCJA provisions critical to the multifamily industry, including:
- Lower individual income tax rates
- Section 199A deduction for pass-through income
- The doubled estate tax exclusion
At the same time, they are advocating for broader housing-related tax incentives, including:
- Expansion of the Low-Income Housing Tax Credit
- Enactment of a Workforce Housing Tax Credit
- Revitalization of Opportunity Zones
- Incentives to convert underutilized commercial properties into multifamily housing
Additionally, the industry is strongly opposing revenue-raising proposals that could negatively impact real estate, such as:
- Changes to the carried interest rules
- Restricts the deductibility of state and local taxes (e.g., income, property, and industry-related taxes) by pass-through entities and REITs
In recent weeks, NMHC and its real estate industry partners have sent letters to Congress urging lawmakers to preserve current law on both of these issues: Carried Interest Letter // Business SALT Letter