On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law as Public Law 119-21. It includes several provisions that may directly affect short-term rental owners. Here's an overview of the key changes — discuss with your CPA how they apply to your specific situation.

100% Bonus Depreciation Restored and Made Permanent

Bonus depreciation had been phasing down — it was 60% in 2024, heading to 40% in 2025. The OBBBA reversed this. According to IRS guidance on OBBBA provisions, for qualifying property placed in service after January 19, 2025, businesses can deduct 100% of the cost in the first year. This applies to assets with a recovery period of 20 years or less — which typically includes furniture, appliances, flooring, and other components identified in a cost segregation study.

Importantly, the OBBBA made this permanent, removing the uncertainty of future phase-downs.

QBI Deduction Made Permanent

The Qualified Business Income (QBI) deduction under IRC Section 199A allows eligible business owners to deduct up to 20% of qualified business income. This was scheduled to expire at the end of 2025; the OBBBA made it permanent.

Whether STR income qualifies for the QBI deduction depends on several factors including how the activity is classified and whether the owner meets IRS safe harbor requirements. This is an area where professional guidance is especially important.

1099-K Threshold Restored to $20,000

The OBBBA permanently reinstated the original 1099-K reporting threshold. Per Airbnb's tax documentation page, platforms will issue Form 1099-K when gross payments exceed $20,000 AND there are more than 200 transactions in a calendar year.

Important: the IRS requires you to report all rental income regardless of whether you receive a 1099-K. The threshold only affects when the platform is required to send the form.

SALT Cap Increased

The state and local tax (SALT) deduction cap was temporarily raised from $10,000 to $40,000 for 2025 through 2029, with the cap phasing out for households with income above $500,000. This may benefit STR owners who itemize deductions and pay significant property taxes.

What This Means for Planning

These changes create new planning opportunities, but the tax implications vary significantly based on individual circumstances including income level, property classification, and state of residence. The best approach is to review these changes with a CPA who understands short-term rental taxation.

DeductFlow helps you organize the data your CPA needs to evaluate these strategies — expenses, hours, mileage, and cost seg records — all in one place.