On July 4th, President Trump signed into law the sweeping federal tax package known as the “Big Beautiful Bill.” (HR 1 of the 119^th Congress) While much of the national conversation focused on individual tax relief, several key provisions stand to reshape the housing and development landscape in Arkansas and across the country.

At ULI Northwest Arkansas, we see the following components of this legislation as an opportunity for cities, developers, and housing advocates to unlock new tools for advancing affordable housing, mixed-use redevelopment, and smarter growth in underserved areas.

Here are the three major provisions we believe are worth acknowledging for our region.

1. Opportunity Zones Made Permanent

Originally enacted in 2017, Opportunity Zones (OZs) provide investors with capital gains tax incentives when they invest in designated low-income census tracts.

OZs work by allowing investors to defer, reduce, or eliminate capital gains taxes when they reinvest those gains into Qualified Opportunity Funds that finance projects in designated zones. The longer the investment is held—especially beyond 10 years—the greater the tax benefit, which creates a strong incentive to support long-term, place-based redevelopment in underinvested communities.

OZs exist in multiple NWA communities, including parts of Fayetteville, Springdale, Siloam Springs, Rogers, Fort Smith, and Berryville.

The new law makes the OZ program permanent, removing the looming expiration date that previously discouraged long-term investment.

Why It Matters:

• Greater investor confidence could mean more capital for catalytic projects.
• Opens the door to revitalization of underutilized downtown corridors and commercial districts.
• With permanence comes the chance to pursue inclusive and community-driven development strategies.

Cities and developers alike should revisit OZ parcels with fresh eyes — this time with a longer runway and the potential for deeper impact.

2. Low-Income Housing Tax Credit (LIHTC) Expanded

The LIHTC program is the country’s primary tool for financing affordable rental housing. These tools work by providing dollar-for-dollar tax credits to private investors in exchange for funding affordable housing construction or preservation. Developers use the equity raised through these credits to reduce the amount of debt needed, which in turn allows them to offer below-market rents for qualifying households.

The new legislation includes two permanent changes that will make a significant difference in Arkansas:

• A 12% increase in 9% credit allocations, giving the Arkansas Development Finance Agency (ADFA) more capacity to support fully affordable developments.
• A reduction in the 4% bond test from 50% to 25%, making it much easier for projects to qualify for these credits with fewer tax-exempt bonds.

Why It Matters:

• This change opens the door to more mixed-income, infill, and workforce housing developments, particularly in secondary cities and rural towns.
• Smaller-scale developers and nonprofit builders now have a clearer path to project viability.
• The reduction in the bond requirement will be especially impactful in Arkansas, where bond capacity has been a key limiting factor.

With land prices rising and the demand for affordable housing growing, this change couldn’t have come at a better time.

3. Tax Relief for Condominium Builders

Perhaps the most overlooked provision in the bill is a change to Section 460(e) of the U.S. Tax Code, which governs when developers recognize income on home construction contracts.

For years, federal tax rules have given single-family home builders the ability to defer taxes on buyer deposits and pre-sales until the home was fully constructed and the sale closed. This was true for all for-sale residential condominium projects up to four units.

Developers desiring to build five or more condo units, however, had to pay taxes during construction anytime a purchase deposit or pre-sale was received even when no money exchanged hands. This taxable “phantom income” created a financial disadvantage for mid- to -large condo projects. The new law levels the playing field.

Why It Matters:

• Larger, multi-unit condo buildings can now benefit from deferred tax recognition — aligning taxes with actual cash flow.
• This will positively reinforce the for-sale, “missing middle” market in urban cores and walkable districts found in NWA downtowns where demand exists but supply is thin.
• Reduces financing pressure for developers and may help reintroduce diversity in housing tenure options, including ownership units in mixed-use and urban contexts. This change could be the nudge needed for more diverse housing options beyond rental apartments and detached homes.

We believe these changes represent a meaningful opportunity to advance affordability, increase supply, and bring underutilized areas back to life. If you are a developer, lender, planner, or policymaker with a project or idea that could benefit from these provisions — or if you want to learn more about them — we invite you to connect with us.