Trump’s Tax Bill Encourages Affordable Housing Development but Cuts Medicaid Access
As Americans face a severe shortage of affordable homes, Donald Trump’s massive tax and spending proposal—dubbed the “One Big Beautiful Bill”—is quietly reshaping the housing debate. While branded as a tax overhaul meant to lock in the 2017 Trump-era cuts, the bill also contains key housing provisions with lasting effects on affordability, rent regulation, and who gets to benefit from homeownership.
Currently under Senate debate after passing the House, the bill promises tax breaks and policy changes that could impact millions—while also drawing heavy criticism for favoring the wealthy, weakening tenant protections, and ballooning the national debt.
Tax Credits to Boost Affordable Housing Supply
At the core of the bill’s housing pitch is an expansion of the Low-Income Housing Tax Credit (LIHTC)—a federal program that incentivizes private developers to build affordable rentals. The bill would restore and extend a 12.5% boost in credit allocations through 2029, while lowering the bond financing threshold to qualify for these credits.
This could be a real boost to inventory: Novogradac, a consulting firm that tracks housing finance, estimates the changes could help finance over 527,000 affordable rental homes between 2026 and 2035.
“This bill would have a decent impact on housing supply,” said Andy Winkler, housing and infrastructure director at the Bipartisan Policy Center. Still, he warned that lawmakers are balancing rising costs with fiscal restraint, which could limit how far the provisions go.
Bigger Tax Breaks for Wealthy Homeowners
One of the most controversial elements is the return of expanded State and Local Tax (SALT) deductions. Capped at $10,000 under Trump’s 2017 tax law, the House version of the bill would raise that cap to $40,000—a change that disproportionately benefits homeowners in high-tax states like California and New York.
Jim Tobin of the National Association of Home Builders sees this as a win. “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,” he said.
Critics argue that this kind of relief won’t help most working-class Americans—especially renters—and mainly serves higher-income households.
Rent Algorithms Get a Legal Shield
Buried deep in the bill is a gift to landlords and property tech companies: a ban on state regulation of rent-setting algorithms and AI pricing tools. If passed, this provision would shield firms like Texas-based RealPage from ongoing legal and regulatory challenges.
RealPage has faced scrutiny in at least eight states for using private rent data to guide pricing decisions, which critics say artificially inflates rents. A coalition of 40 state attorneys general warned Congress against including the measure, calling it “wholly destructive of reasonable state efforts to prevent known harms associated with AI.”
The bill, however, would bar such regulations for the next ten years.
Skyrocketing Debt Could Drive Mortgage Rates Higher
The bill’s $2.4 trillion projected increase to the national debt could have its own downstream impact on the housing market. Economists say that kind of fiscal strain could push mortgage rates even higher.
As the government borrows more to cover rising costs, investors demand higher interest rates on Treasury bonds. That translates to higher mortgage rates for homebuyers and higher financing costs for homebuilders—exactly what the market doesn’t need.
“With rates already near 7%, this could make things worse,” said Winkler. “It means people buying fewer homes and people being able to build fewer homes.”
White House Budget Cuts Could Make Housing Crisis Worse
Meanwhile, the White House’s proposed 2026 budget includes steep cuts to housing and community development programs, adding more uncertainty to the future of affordability.
David Dworkin, president of the National Housing Conference, said the budget is far from final. “The president’s budget is an opening proposal,” he said, noting that Trump has also voiced support for addressing affordability. Still, Dworkin and other advocates are pushing Congress to reject the cuts.
A New Housing Era—or a Windfall for the Rich?
While the “One Big Beautiful Bill” may offer a few steps toward housing relief, it also paves the way for deregulation, widened wealth gaps, and greater instability for renters. From expanded tax breaks for high-income homeowners to protections for rent-setting tech, the bill reveals a housing vision shaped more by corporate interests than community needs.
And with debt-driven mortgage rates rising, it’s not just low-income families who could get squeezed—but the entire American housing market.
