With President Donald Trump and Congress passing the much-ballyhooed “One Big Beautiful Bill”, rewriting America’s tax code for the near future and beyond, many rental property owners and investors are wondering exactly how it will impact their business. But fear not, landlords – it’s mostly good news.
We’re now a couple of weeks out from the bill being passed, and tax experts are starting to get a sense of what the changes mean. They are significant for landlords, with many tax incentives written into the new spending bill that could put more money in your pocket.
Among the changes investors should note: 100% bonus depreciation is returning, allowing property owners to write off the entirety of certain home renovations up front; SALT tax deduction caps have increased, enabling property owners to deduct much more income in high-tax areas; and two sneaky landlord-friendly tax stipulations were extended beyond 2025.
Sound complicated? Taxes always do on the surface, but it’s more straightforward than you may think. Let’s break it down piece by piece and see how the One Big Beautiful Bill can put some big beautiful dollars back into landlords’ bank accounts.
Bonus Depreciation: Back to 100%
One of the most important provisions for landlords in this bill is the return of 100% bonus depreciation. For the uninitiated, depreciation allows landlords to write off large purchases made to upgrade their properties—appliances, furniture, landscaping, etc.
Under normal depreciation, tax write-offs happen gradually. For example, a $5,000 refrigerator would be classified as 5-year property under IRS Publication 946, allowing landlords to deduct $1,000 per year over five years.
Bonus depreciation, however, lets landlords deduct the full cost upfront. Previously, landlords could only write off 40% of a purchase in the first year—so that $5,000 fridge meant just $2,000 in immediate tax relief.
With Trump’s new budget bill, the bonus depreciation percentage is back to 100%, meaning landlords can now deduct the entire cost in the same year. That $5K fridge equals a $5K tax deduction—as long as the upgrade has a useful life of 20 years or less.
Consider a landlord who sells a property for a sizable gain, triggering a big tax bill. They also upgrade another rental’s yard for $15,000 and replace a washer/dryer set for $2,000. With bonus depreciation, they can potentially deduct all $17,000 that year—offsetting capital gains, improving their properties, and even boosting tenant satisfaction and rents.
You may have heard of the “BRRRR Method” (Buy, Rehab, Rent, Refinance, Repeat). With high interest rates and economic uncertainty, many investors hesitated. But with full bonus depreciation back in 2025, that “rehab” step just became far more appealing.
What Qualifies for Bonus Depreciation?
Not every large purchase qualifies for a bonus depreciation write-off. The “useful life of 20 years or less” caveat is critical.
Any improvement is assigned a “class life” by the IRS—essentially how long the agency expects it to last. Structural upgrades like load-bearing walls generally don’t qualify, as they’re considered to have a useful life longer than 20 years. These instead qualify for traditional depreciation.
Examples of upgrades likely to qualify include:
- Land improvements (landscaping, fences, driveways, sidewalks)
- Furniture (couches, beds, chairs)
- Appliances (stoves, refrigerators, washing machines)
- Carpeting
- Individual window air conditioning units (entire HVAC systems generally don’t qualify)
Landlords should consider a Cost Segregation Study to determine the useful life of their assets and, with 100% bonus depreciation, evaluate whether upgrades make financial sense now.
Section 179 vs. Bonus Depreciation
It’s easy to confuse bonus depreciation with Section 179, another tax provision that lets businesses deduct the full cost of qualifying equipment and property improvements upfront.
But there are key differences landlords should understand:
- Section 179 does not apply to real estate itself (building or land improvements). It applies to business assets used in rental activities treated as a trade or business.
- Even when landlords qualify, Section 179 deductions can only reduce taxable income to zero.
By contrast, bonus depreciation can create a negative taxable income—often more valuable for real estate investors.
“The reason we typically see and talk about bonus depreciation with respect to landlords is that it allows us to go beyond netting the income to zero, and get to a negative taxable income amount,” said Keystone CPA Amanda Han.
SALT Tax Deductions: More Relief
You may have heard the term thrown around and be wondering, what is the SALT tax? It's not a tax on sodium chloride; SALT stands for state and local taxes, and landlords can deduct the amount paid locally from their federal tax bill.
Previously, taxpayers could deduct up to $10,000 in SALT payments. Under the new spending bill, that SALT tax deduction cap has quadrupled to $40,000—even if landlords don’t live in the state where their rental properties are located.
Imagine a real-world example where a Texas-based landlord owning two rental properties in California earns $300,000 in net profit after expenses. California’s progressive income tax (~9.3%) results in $27,900 in state taxes. Local taxes might add another $600, totaling $28,500.
Under the old SALT tax cap, only $10,000 was deductible. Now, they can deduct the full $28,500 from their federal tax liability. That's nearly $20,000 of savings under the new bill.
This increase lasts through 2029. For high earners ($500K+), phase-outs may apply, so consult your CPA to confirm eligibility.
Extensions: Qualified Business Income and Pass-Through Entity Deductions
The bill also extends two valuable tax breaks beyond 2025: the Qualified Business Income (QBI) deduction and the Pass-Through Entity (PTE) tax break.
The QBI deduction allows eligible taxpayers—including many landlords—to deduct up to 20% of qualified business income from taxes.
The PTE tax break lets landlords have their pass-through entity (LLC, partnership, or S corporation) pay state taxes directly, helping bypass federal SALT deduction limits.
“Honestly, we still see landlords missing these two breaks all the time,” said Keystone CPA Amanda Han. “Don’t assume your CPA is applying them—ask directly. Say, ‘Have I taken advantage of the Qualified Business Income deduction? And how much did it save me?’ That one question could uncover thousands of dollars in missed savings.”
Potential Drawbacks for Landlords
For landlords, there are few drawbacks in the One Big Beautiful Bill.
The main exception is the rollback of clean-energy incentives from the 2022 Inflation Reduction Act. Tax credits for solar panels, EV chargers, and other energy-efficient appliances have been scaled back or eliminated.
“If you were looking to do solar or other green improvements on your properties, think about that sooner rather than later,” Han advised.
Additionally, the shift back to fossil fuels could lead to higher utility costs in the years ahead.
Final Thoughts
With the One Big Beautiful Bill in place, it’s hard to imagine a better time to invest in rental property. Expanded tax incentives—like 100% bonus depreciation and higher SALT deduction caps—offer landlords powerful tools to grow their portfolios and improve cash flow.
For seasoned owners, now is the time to sit down with a CPA and plan the next six months. Strategic upgrades, capital gains deferrals, and tax-advantaged investments could mean significant savings.
As you expand or improve your rental business, don’t forget to protect your investment. At Steadily, we specialize in fast, affordable landlord insurance designed for property owners like you.
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