On the Fourth of July, President Trump signed into law a reconciliation bill containing Housing Credit provisions projected to finance 1.22 million additional affordable homes over the next decade than otherwise possible, according to Novogradac.
The following modifications to the Housing Credit have been enacted:
- Housing Credit allocation increase: The bill will provide a permanent 12 percent Housing Credit allocation increase beginning in 2026.
- Bond threshold test reduction: The 50 percent bond financing threshold test will be lowered to 25 percent permanently beginning in 2026, lowering a barrier to affordable housing production and allowing states to make more efficient use of their bond cap resources.
These provisions derive from the bipartisan Affordable Housing Credit Improvement Act (AHCIA) of 2025 (H.R.2725/S.1515), which is cosponsored by over one-third of the current Congress. The bill is sponsored by Senator Todd Young (R-IN) in the Senate and Representative Darin LaHood (R-IL) in the House. The other lead cosponsors of the bill are Sens. Maria Cantwell (D-WA), Marsha Blackburn (R-TN), and Finance Committee Ranking Member Ron Wyden (D-OR) in the Senate, and Reps. Suzan DelBene (D-WA), Claudia Tenney (R-NY), Jimmy Panetta (D-CA), Randy Feenstra (R-IA), and Don Beyer (D-VA) in the House. While the full AHCIA is projected to finance nearly 1.6 million additional affordable homes, the impact of the provisions included in the reconciliation bill alone will account for nearly 80% of that total.
The strong bipartisan support for expanding and strengthening the Housing Credit reflects the increasing severity of the nation’s affordable housing needs across urban, suburban, and rural areas. According to the Harvard Joint Center for Housing Studies, half of all U.S. renters were cost-burdened as of 2023, and the Department of Housing and Urban Development reported that homelessness rose by 18% in 2024.
Against the backdrop of a worsening affordable housing crisis, Housing Credit homes support economic stability and provide meaningful savings for low-income families who might otherwise face difficult tradeoffs with other essential needs or struggle to maintain stable housing altogether. Compared to those living in market rate apartments, residents of Housing Credit homes pay $653 less on monthly rent on average, amounting to an annual savings of over $7,800. With financing for 1.22 million additional affordable homes on the way, many more low-income families will benefit from the reduced costs of living in a Housing Credit home.
“The Housing Credit provisions in the reconciliation bill will finance well 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 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.
The AHTCC applauds the enactment of this historic Housing Credit investment, which provides a much-needed boost to affordable housing production at a time when the need is greater than ever. We are deeply grateful to our members and partners, whose years of dedicated advocacy have meaningfully contributed to achieving this significant milestone for the Housing Credit and the families it serves. As a leading advocacy organization committed to expanding and strengthening the Housing Credit, the AHTCC remains focused on advancing a robust policy agenda to ensure the program effectively addresses the nation’s persistent and growing affordable housing needs.
Comments are closed.