Low-Income Housing Tax Credit (LIHTC) Updates

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The Low-Income Housing Tax Credit (LIHTC) program provides critical support to the nation's affordable housing production. Given that 11.6 million renter households spend more than half their income on rent, lawmakers should strengthen the program by increasing credit authority and reducing the bond financing threshold to 25 percent to receive the full amount of 4 percent Low-Income Housing Tax Credits.

Congress should continue to invest in the LIHTC’s success by making permanent the expired increase in program authority effective in 2018-2021, as well as further augmenting credit authority by 50 percent. Additionally, Congress should lower the bond financing threshold to 25 percent from 50 percent to receive the full amount of 4 percent Low-Income Housing Tax Credits.
Read on for the latest legislative, regulatory and industry updates on LIHTC.

May 11, 2023

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Bicameral, Bipartisan Legislation Introduced to Increase Low-Income Housing Tax Credit (LIHTC) Funding

Members of the House and Senate on May 11 introduced bipartisan legislation to expand the Low-Income Housing Tax Credit.

What This Means: While the House and Senate versions of The Affordable Housing Credit Improvement Act of 2023 are not identical, both would:

expand the 9 percent credit by restoring the 12.5 percent increase in credit authority that expired at the end of 2021 and further augment credit authority by 50 percent; and
enhance the use of existing private activity bond authority by reducing the bond financing threshold to maximize 4 percent credits to 25 percent from 50 percent.

Why This Matters: Estimates indicate that the key unit financing provisions in the bills could finance up to 1.94 million additional affordable homes over 10 years.

NMHC's Viewpoint: NMHC strongly supports this legislation and will be working with The ACTION Campaign and other stakeholders to encourage Congress to include its provisions in any moving tax legislation.

Next Steps: Congress could consider legislation later this year that would address the child tax credit and certain business tax incentives. We are also supporting other proposals in the tax space to boost housing supply, including those that would establish a middle-income housing tax credit and provide a tax incentive to convert underutilized commercial buildings into rental housing.

Learn more by accessing detailed summaries of the bills.

March 7, 2023

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LIHTC Expansion and Enhancement Proposals Included as Part of NMHC and NAA Senate Finance Testimony

On March 7, the U.S. Senate Committee on Finance called upon the multifamily industry to go on the record regarding tax policy’s potential role in helping to close the supply-demand gap and increase housing affordability. Appearing as a witness at the Committee’s hearing, titled Tax Policy’s Role In Increasing Affordable Housing Supply for Working Families, NMHC and NAA provided lawmakers background on the challenge at hand and how we can tackle it—including provisions that would impact LIHTC.

What This Means: As part of our testimony, NMHC and NAA argued that the LIHTC program provides critical support to the nation's affordable housing production but could be made even more impactful.

NMHC's Viewpoint: To further the impact of LIHTC, NMHC and NAA put forward a handful of legislative proposals that we support:

Introduced last Congress by Senators Cantwell, Young, Wyden, and Portman (and cosponsored by Finance Committee Senators Blackburn, Bennet, Brown, Cardin, Carper, Casey, Cortez Masto, Hassan, Menendez, Stabenow, and Whitehouse), this bipartisan bill would, among other provisions, make permanent the now-expired 12.5 percent increase in LIHTC authority for 2018-2021 to enable the production of new units and further augment credit authority by 50 percent. Additionally, the bill would lower the private activity bond financing threshold to 25 percent from 50 percent required to receive the full amount of 4 percent Low-Income Housing Tax Credits.
Increase the private activity bond volume cap to enhance the utilization of 4 percent Low-Income Housing Tax Credits

Check out NMHC President Sharon Wilson Geno’s first-hand account of the hearing and its importance to the industry.

Matthew Berger mberger@nmhc.org