Congress Passes ‘One Big Beautiful Bill,’ Makes Opportunity Zone Program Permanent

Following a drama-filled week of political theater, arm twisting and backroom maneuvering, the U.S. House of Representatives today passed President Trump’s sprawling “One Big Beautiful Bill” by a razor-thin vote of 218-214. The U.S. Senate passed the bill earlier this week by a vote of 51-50, with Vice President J.D. Vance casting the tie-breaking vote.

The nearly 900-page bill will be sent to the White House for the president’s signature, which is expected tomorrow to coincide with the 249th anniversary of the Declaration of Independence.

The bill — a sweeping tax and spending package — permanently extends the 2017 Trump-era income tax rates and introduces several new deductions targeting working-class taxpayers and seniors. These include deductions for tips and overtime income, a new senior deduction, and an expanded child tax credit. It also increases the estate-tax exemption and repeals or limits several clean-energy incentives.

Spending provisions include hundreds of billions of dollars for defense and border security, offset by cuts to Medicaid, the Supplemental Nutrition Assistance Program, and energy programs. The legislation also authorizes a $50 billion rural hospital fund and includes deficit-financed tax policies that are expected to add nearly $3.4 trillion to the federal debt over the next decade, according to Congressional Budget Office estimates.

Key provisions affecting the alternative investment industry

Qualified business income deduction: The legislation makes permanent the 20% qualified business income deduction for pass-through businesses, providing long-term clarity and tax relief to a broad segment of private enterprises.

State and local tax (SALT) deduction cap: The bill raises the SALT deduction cap to $40,000 starting in 2025, applying to individuals earning up to $500,000, with that threshold increasing by 1% annually through 2029. After five years, in 2030, the cap reverts to $10,000.

Bonus depreciation extension: The bill revives and extends full 100% bonus depreciation through 2027 (applied retroactively to Jan. 1, 2024), phasing down to 80% in 2028, 60% in 2029, and 40% in 2030.

Tax treatment of carried interest: The bill retains favorable treatment of carried interest, reversing prior efforts to classify it as ordinary income.

Opportunity zones overhaul: Among the most transformative sections of the bill are the reforms to the opportunity zone program. The legislation makes the OZ program permanent, adopting a recurring 10-year designation cycle, with new eligible tracts certified starting July 1, 2026, and investable from Jan. 1, 2027. It tightens eligibility by requiring tracts to have a median family income below 70% of the area average and eliminates the use of contiguous tracts.

The bill revises the basis step-up rules: Investors holding qualified opportunity fund investments for at least five years will now receive a 10% basis increase. That adjustment jumps to 30% for investments in designated rural opportunity funds. Additionally, rural OZ property will now be considered substantially improved if the investment equals or exceeds 50% of the original basis — down from the 100% requirement.

The legislation introduces a clear deferral end date: Capital gains invested after Dec. 31, 2026, must be recognized on the earlier of sale or Dec. 31, 2033. Each new tranche restarts a 10-year recognition window.

For transparency, the bill mandates annual reporting on equity raised, jobs created, housing units built and rural vs. urban allocations. Treasury must publicly disclose aggregate data, while the IRS receives $15 million in dedicated enforcement funding.

The legislative win is expected to energize Trump-aligned economic policy over the coming months. Treasury and SEC implementation rules will determine how quickly changes filter into fund structures and investment product design.

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