Key low-income housing tax credit (LIHTC) provisions were added to the House version of the Build Back Better (BBB) plan in early November after they were left out of the White House’s initial framework.
The latest House package calls for increasing the 9% LIHTC allocation cap by 10% plus inflation each year from 2022 to 2024 when it will have risen to $3.97 per capita or a small state minimum of about $4.58 million. In 2025, the housing credit volume cap would fall back to $2.65 per capita or a small state minimum of $3.12 million.
Among other key LIHTC provisions, the House manager’s amendment includes reducing the 50% bond financing test to 25% for five years. Many advocates were originally expecting that this change would be for four years, but they received an extra year with the bond test reduction proposed through 2026.
Supporters had been emphasizing the significance of this change especially in helping redevelop aging public housing through the Rental Assistance Demonstration program, says David Gasson, partner at MG Housing Strategies and executive director of the Housing Advisory Group.
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