The House of Representatives passed the 2025 reconciliation bill, which includes key provisions to expand the low-income housing tax credit (LIHTC).
The 215-214 vote today sends the sweeping legislation dubbed the “One Big Beautiful Bill” to the Senate, which is expected to consider it after the Memorial Day break.
“The housing credit provisions in the reconciliation legislation passed by the House of Representatives today are a welcome step toward the creation of over half a million additional affordable homes in the U.S.,” said Emily Cadik, CEO of the Affordable Housing Tax Credit Coalition. “At a time when housing costs remain high, and safe, affordable homes remain out of reach in too many communities across the country, we applaud the House’s action toward resolving a crisis that continues to affect millions of Americans.”
The bill, which includes several of the main provisions of the Affordable Housing Credit Improvement Act, represents the largest increase in LIHTC resources since Congress raised the caps on housing credits and private-activity bonds and indexed the caps for inflation 25 years ago, according to the National Council of State Housing Agencies.
The bill seeks to:
- Increase the LIHTC volume cap for 9% properties by 12.5% for 2026 to 2029;
- Lower the bond financing threshold to 25% for 4% housing credit properties placed in service after Dec. 31, 2025, so long as the bonds financing the project have an issue date between Dec. 31, 2025, and Jan. 1, 2030; and
- Allow state housing credit agencies to provide a basis boost of up to 30% for properties located in rural and Native American areas placed in service after Dec. 31, 2025, and before Jan. 1, 2030.
The Senate will take the bill and work on getting its version passed. At this time, housing advocates are not expecting any changes to the LIHTC proposals, but they would like to see some of the changes made permanent, according to David Gasson, partner at MG Housing Strategies and executive director of the Housing Advisory Group.
Beyond the LIHTC program, the House bill also looks to extend and bolster the Opportunity Zone (OZ) program, with new attention on rural areas. Launched in 2017, the OZ seeks to spur economic growth in low-income communities.
“We have worked diligently with Congressional leadership and committee members to preserve key elements of the 2017 Tax Cuts and Jobs Act,” said Bob Broeksmit, president and CEO of the Mortgage Bankers Association. “This includes the deduction for qualified residence interest, the up to $500,000 homeowner exclusion on the gain on the sale of a principal residence, Section 1031 like-kind exchanges, and the continued deductibility of business interest for real estate.
“We also support the bill’s expanded deduction for Qualified Business Income under a permanent Section 199A, needed improvements to the LIHTC program, and a new round of Opportunity Zones.”
The bill also proposes to end several energy tax credits used by the housing industry, including Section 45L (New Energy Efficient Home Tax Credit) and Section 48E (Clean Electricity Tax Credit).
Senators may fight some of these changes as well as cuts to Medicaid and Medicare.
LeadingAge, an association representing nonprofit and mission-driver providers of aging services, warns that One Big Beautiful Bill will have “ugly consequences.”
“If enacted, the policies in the House-passed bill will have a devastating impact on millions of older adults and their families who rely on Medicaid and Medicare for health care and long-term care and services, and on our nonprofit provider members who serve them,” said Katie Smith Sloan, president and CEO. “LeadingAge will continue to work with the Senate to oppose the House’s purposeful removal of at least 10 million people from their health insurance, cutting $500 billion from Medicare, and the slashing of $800 billion in federal Medicaid funding to states—actions that will shred the health safety net for older adults and ultimately drive up health care costs.”
