Brown sausage in a skillet over medium heat, breaking apart as it cooks. Drain fat and cool slightly.
Grease a 9x13 baking dish. Layer cubed bread across the bottom.
Add cooked sausage over bread. Sprinkle 1.5 cups cheddar on top.
Whisk eggs, milk, garlic powder, onion powder, mustard, salt, and pepper together. Pour evenly over the layered dish.
Press bread down gently to soak. Top with remaining cheese. Cover and refrigerate at least 1 hour or overnight.
Remove from fridge 20 minutes before baking. Preheat oven to 350°F.
Bake uncovered for 45 to 55 minutes until center is set and top is golden. Rest 5 to 10 minutes before slicing.