A permanent 12% increase in low-income housing tax credit (LIHTC) authority is included in the Senate reconciliation bill.
The proposal is in in the legislative text recently released by Senate Finance Committee chairman Mike Crapo (R-Idaho).
The Senate plan to permanently increase LIHTC allocations beginning in 2026 differs from the House bill, which calls for a 12.5% increase for four years.
The Senate version also seeks to permanently lower the bond financing threshold test from 50% to 25%. The House version would also lower the bond test to 25% but for just four years.
“With his version of the tax section for the One Big Beautiful Bill, chairman Mike Crapo has channeled the conversations so many of us have had for years about certainty in affordable housing policy,” says David Gasson, partner at MG Housing Strategies. “By including a permanent 12% increase in the 9% LIHTC and permanently reducing the bond test from 50% to 25%, Sen. Crapo’s proposal would allow developers, investors, and state housing agencies the ability to develop long-term plans for the creation of affordable housing. At around $15.7 billion, this would be the largest investment in the LIHTC and affordable housing production in decades.”
The Affordable Housing Tax Credit Coalition (AHTCC) applauded the move.
“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,” says Emily Cadik, CEO of the Coalition.
The Senate legislation does not include the proposed basis boosts for rural and Native American communities that are included in the House bill.
“At this time, we do not anticipate changes in the Senate version of the LIHTC section and look forward to final passage of the bill once the House and Senate work out their differences with the other sections of the legislation,” Gasson says.
Adoption of the LIHTC provisions would accomplish major goals of the Affordable Housing Credit Improvement Act, which affordable housing advocates have been working to pass.
The negotiations between the House and Senate will be challenging as lawmakers are expected to clash about cuts to Medicaid and other key programs.
Read more from the National Council of State Housing Agencies.
