The Affordable Housing Tax Credit Coalition (AHTCC) applauds Senate Majority Leader John Thune (R-SD), Senate Finance Committee Chairman Mike Crapo (R-ID), and the Senate Finance Committee for including permanent provisions to expand and strengthen the Low-Income Housing Tax Credit (Housing Credit) in the budget reconciliation legislation released yesterday. These changes to the Housing Credit provisions would double the projected impact from the version the House passed to well over 1 million affordable homes over the next decade.
“The Housing Credit provisions in the Senate reconciliation bill would finance over a million more affordable homes in the U.S. – a profound impact at a time of staggering need” said AHTCC Chief Executive Officer Emily Cadik. “We applaud this effort to take an unprecedented step toward resolving a crisis that continues to affect millions of Americans.”
“These Housing Credit provisions represent bold action to increase the nation’s housing supply by over one million homes at a time when the affordable housing crisis has reached record levels and has affected every state, district, and community,” said Dudley Benoit, President of the AHTCC Board of Directors and Senior Managing Director of Walker & Dunlop. “The Housing Credit is the most effective tool we have to meet the affordable housing needs in rural, suburban, and urban areas which in turn has proven to generate economic growth, support workforces, and strengthen communities.”
The Senate’s bill includes the following modifications to the Housing Credit:
- Housing Credit allocation increase: the bill would provide a permanent 12% Housing Credit allocation increase beginning in 2026.
- Bond threshold test reduction: The 50 percent bond financing threshold test would be lowered to 25 percent permanently, lowering a barrier to affordable housing production and allowing states to make more efficient use of their bond cap resources . According to Novogradac, a permanent 25 percent test alone will finance 1.14 million affordable homes over the next decade than otherwise possible.
These proposals were introduced as part of the bipartisan Affordable Housing Credit Improvement Act (AHCIA, S.1515/H.R.2725) of 2025. The bill was introduced in April in the House of Representatives by Rep. Darin LaHood (R-IL) and in the Senate by Sen. Todd Young (R-IN). The legislation already has the support of more than one-third of Congress – 147 cosponsors in the House and 42 cosponsors in the Senate, evenly balanced with Republicans and Democrats, and representing 46 states across the country.
The Housing Credit will also provide a direct financial benefit to American households. An AHTCC analysis of Moody’s data found that rents charged in Housing Credit homes averaged $7,800 (38 percent) less per year than market-rate. The analysis, which compared average asking rents across 80 U.S. metro areas, found that monthly asking rents for rental homes financed with the Housing Credit averaged $653 lower than those of market-rate rental homes.
This legislation comes as communities across the country grapple with higher housing costs and dwindling supply. Shelter expenses alone accounted for over two-thirds of the increase in core inflation in 2023, and construction inputs have surged nearly 39 percent since February 2020, according to the Bureau of Labor Statistics. As a result, more than 12.1 million renter households (half of all renters) pay over half their income on rent—forcing them to make impossible choices between essentials like food, healthcare, and education. Alarmingly, national homelessness rates also rose 18 percent in 2024, underscoring the critical need for solutions that expand affordable housing. Action on affordable housing supports President Trump’s executive order, issued on his first day in office, which called for delivering emergency price relief by lowering housing costs and increasing supply.
The Housing Credit is the nation’s primary financing tool for the development and preservation of affordable rental housing. Established in 1986, under President Reagan and last expanded during the first Trump Administration, the Housing Credit is a proven, pro-growth tax policy with a nearly 40-year track record of leveraging private investment to increase the supply of affordable rental housing by more than 4 million affordable homes and has served over 9.28 million low-income households, including veterans, seniors, people with disabilities, and working families with children. The Housing Credit also supports more than 6.6 million jobs annually and has generated more than $268 billion in tax revenue and $746 billion in wages and income.
Comments are closed.