How the “One Big Beautiful Bill” Could Affect Your Next Home Purchase

On July 4, 2025, President Trump signed into law a sweeping piece of legislation called the “One Big Beautiful Bill” (H.R.1). While the headlines have focused on national politics and defense spending, this new law includes several provisions that directly impact homebuyers, homeowners, and anyone considering a move in the next few years.

If you're planning to buy, refinance, or simply want to understand how recent tax changes might affect your finances, here’s what you need to know:

---

1. Tax Deductions for Tips and Overtime Pay

If you earn tips or work overtime, this is big news.

For tax years 2025 through 2028:

• You may deduct up to $25,000 of qualified tips from your taxable income.

• You may also deduct up to $12,500 of qualified overtime compensation.

This could result in a lower tax bill and higher qualifying income when applying for a mortgage—especially helpful if you’re in the hospitality, service, or hourly workforce.

---

2. New $6,000 Tax Deduction for Seniors

If you or a family member is 65 or older, you could benefit from a new $6,000 per-person deduction (subject to income limits). This extra deduction could improve monthly cash flow and make qualifying for a home loan a bit easier—especially for retired buyers using asset-based income strategies.

---

3. SALT Cap Raised to $40,000

The bill raises the deduction cap for State and Local Taxes (SALT) from $10,000 to $40,000 for most taxpayers through 2029.

This is especially impactful for those relocating from high-tax states. For example, if you're selling a home in New York or New Jersey to purchase in South Carolina, you may now be able to deduct more property tax and state income tax—making your overall housing budget go further.

---

4. Mortgage Insurance Premiums Are Deductible Again

Mortgage insurance is often required when putting down less than 20%. The new law restores the deductibility of mortgage insurance premiums, which had previously expired.

This change could save qualified homeowners hundreds of dollars per year—and make buying with a smaller down payment more financially viable.

---

5. Auto Loan Interest Is Now Tax Deductible (Yes, Really)

For the first time in decades, the government will let you deduct interest paid on new auto loans—but there are a few conditions:

• The car must be assembled in the U.S.

• The loan must be a first-lien auto loan

• The deduction is capped at $10,000, and phases out at higher income levels

While not directly tied to your mortgage, this change could help increase your after-tax income—another factor lenders consider in your approval.

---

6. Mortgage Interest Deduction Cap Made Permanent

If you’re buying a home with a mortgage of up to $750,000, you’ll still be able to deduct interest on that loan. The cap, which was previously set to expire, has now been made permanent—providing long-term tax planning stability for homebuyers in higher price ranges.

---

What This Means for You

While these changes may seem technical, they can have a very real impact on your homebuying journey—from how much you qualify for, to how much you pay in taxes each year.

If you’re thinking of buying, refinancing, or relocating, now is a good time to review your strategy under the new rules. Our team can walk you through the updates and help you make the most of them.

---

📞 Questions? Ready to get pre-approved?
We’re here to help. Reach out any time or visit KristoffTeam.com to get started.