Heat oven to 350°F; grease a 9x13-inch dish with spray or butter.
Cook sausage in a large skillet over medium-high 7-8 minutes, breaking up, until browned and cooked through; drain on paper towels.
Cook onion and pepper in same skillet about 5 minutes until softened; add spinach and cook about 2 minutes until wilted. Remove from heat.
Layer bread, sausage, vegetables, and 1½ cups cheese evenly in dish.
Whisk eggs, milk, garlic powder, Italian seasoning, salt, and pepper in a large bowl.
Pour evenly over filling; press gently with spatula to soak.
Top with ½ cup cheese; bake uncovered 45-50 minutes until center sets and top is golden.
Cool 10 minutes; cut into squares and serve warm.
To freeze, cool completely and wrap whole casserole or portions tightly in plastic and foil; freeze up to 3 months. Thaw refrigerated overnight; reheat at 350°F for 25-30 minutes or microwave portions 2-3 minutes.